$4+ Gas Prices, Limited Inventory, Recovering Economy….Is Now a Good Time to Buy a New or Used Auto?
According to AAA, the average national gas price today hit $4.36 a gallon. With hard working folks still getting back on their feet after the economic impacts of the past few years this is not welcome news for anybody in the US. The rise in gas prices can mean a direct increase in your monthly expenses, including everything from your weekly fill-up at the gas station to the cost of your groceries (which increase in price due to higher transportation costs).
And if you are in the market for a new or used auto, it can hurt even more. Because of the drop in auto sales during 2010, and the increase in quality and longevity of autos in general, the supply of used autos in the market has declined over the past few years. KBB recently reported that used autos are holding their value stronger now more than ever, so buying a used auto is not necessarily the best option.
So because of all of these factors is now a good time to buy a new or used auto?
First, as a potential buyer, you have to keep in mind that there will always be factors that you don’t control. Even if though there are some negatives to consider, there are some positives as well. For example, even though used auto prices are high right now, auto finance interest rates are very low and lenders have started approving more consumers compared to a few years ago.
As an auto buyer, these external factors should be part of your planning, BUT NOT THE PRIMARY FACTOR.
It’s simple, you should buy a new or used auto when:
a) You feel you are in a stable financial situation to do so (i.e. you have good credit, you have saved up a sizable down payment, you are able to pay with cash or financing)
b) You feel that you definitely need to acquire or replace your current auto
As much as we all love that new (or new to you) auto smell, external factors should not be the primary factor in determining whether or not you run out and buy an auto.
Now with that said, if you are definitely in the market to buy, and you are in a financial position to purchase new or used, the pros of buying a new auto are weighing heavier than buying used. Normally a used auto can be a really great deal because a new auto loses a lot of their initial value as soon as you drive it off the dealer's lot. But that immediate depreciation has dropped off substantially as of late because there are a limited amount of used autos available, as the economy and rising gas prices have resulted in more current owners holding onto their existing auto. So, you should heavily weigh the benefits of buying a new auto right now....the cost may be higher, but the risk you take on the autos quality are lower. Since you are the first owner on a new auto you should have no problems anytime soon, and the protection of a comprehensive warranty from the manufacturer.
As we recommend throughout AutoBuying101.com, the key is determining how much you can afford, researching autos that meet your criteria, and shopping around for the best deal.