How to Lease or Buy a Car in Today’s Crazy Automotive Market

It’s no secret that the automotive industry has been experiencing a serious supply chain shortage throughout the pandemic. Auto manufacturers aren’t able to get certain necessary parts like semiconductors and computer chips. In addition, there have been many other production and shipping problems as a result of the pandemic.

If your lease is up or you are in the market to buy a car, you may find it tougher to navigate today’s crazy automotive market than it normally is. It’s not as easy to just show up at a dealership and walk away with a new vehicle the same day.

Here are some tips and issues you should consider when buying or leasing a new car in 2022:

Online Research

Test drive opportunities may be limited and the showroom stock may not give you everything you want to see at the dealership. It’s a smart idea to do as much research as you can online to at least narrow down your top vehicle options, or maybe make your final choice. Then, there are online automotive retailers like Carvana, where you can actually purchase and finance your vehicle to be delivered right to your door or picked up at a convenient location (yes, the car vending machines they advertise are real). Online purchases may allow you to get all the options you want, but be prepared to pay extra for shipping and handling.

Don’t Be Picky

If you are really eager to buy or lease a new vehicle soon, you may want to accept the fact that your options will be more limited right now. You may not get the exact paint color you wanted or all the desired features. The pickier you are, the more trouble you will have finding the car you want at a reasonable price. You may have to sacrifice some personal preferences and needs to keep the price down and get your vehicle sooner.

Extend Your Lease or Exercise the Purchase Option

If your lease is ending soon, you will definitely want to do your research and explore your options. You may be able to extend your lease for awhile until you find a new car that suits your needs and budget. Or, you may also want to simply exercise the lease purchase option if the financing terms are agreeable. Even if you opt to sell or trade it in later, you will be in less of a rush and can avoid making hasty decisions on a new lease or purchase.

Some leaseholders are able to purchase their vehicles and then resell or trade in at higher values than the buyout price. Quality used cars are demanding a pretty penny right now, so this solution may open up some opportunities if the numbers work out in your favor. Just remember you don’t just have to turn your car in when the lease is up. There are other options to consider and are worth exploring given these supply shortages and value increases.

Expect to Pay More

As we all learned in economics class, supply and demand drive prices. A lower supply of new cars is driving up values of both new and used vehicles. If you are buying or leasing now, you can expect to pay more for your car. The good news is interest rates are still relatively low, so you may be able to get what you want with the right financing program. Just remember depreciation happens quickly for new cars and this supply shortage won’t last forever. Be careful not to overpay too much if you don’t have to.

Buy a Used Vehicle

It might not sound as exciting, but you may be better off buying a used car. Used vehicle prices are also very high right now, but it’s nothing compared to new vehicles. Used vehicles also won’t depreciate nearly as quickly, so it may be a better long-term investment if you find something you like at a decent price. Just make sure it’s in good condition and carefully review all inspection and accident reports to avoid getting a lemon.

Just showing up to the dealership and taking whatever they offer you is never a great plan. It’s especially risky these days because of the weaker supply and higher prices. Consider all your options and make smart decisions. The smartest decision may be not buying or leasing a new/used vehicle at all for awhile. If there’s nothing wrong with your current car, you may want to avoid today’s automotive market altogether.

For help with all your financial planning and money management needs, contact Illumination Wealth. Our team is here to guide you to better financial decisions and long-term wealth planning.