Buying cars has never been on most people’s favorite to-do list. But in a market where inventory is tight and prices are high, car buyers may feel like they’re getting even more of a bait-and-switch than usual.
Before the pandemic, consumers used to be able to look up a car’s manufacturer’s suggested retail price (MSRP) and find a dealer willing to haggle and sell the car at or below that number.
But ongoing supply chain problems mean it’s now more common for dealers to mark down cars thousands of dollars above MSRP and not have to cut any deals to clear their small inventory.
The Federal Trade Commission proposed new rules earlier this summer to help consumers avoid hidden costs. Meanwhile, automotive experts say patience and lots of research are a consumer’s best friend right now.
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Brian Moody, executive editor at Autotrader, said there are a few things consumers can do to avoid paying exorbitant prices or waiting months for the car they want to be in stock.
“Don’t go looking for the most popular cars, or the most popular types of cars,” he said. They will include full-size pickup trucks and full-size SUVs. Smaller compact cars and sedans are more available and priced not as high above MSRP.
Those who want to avoid haggling or selling themselves on feature packages should look for dealers that have started advertising “no markup,” Moody said.
“A place where they’ll just sell the car for sticker price,” he said.
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Don’t shop around until you’re ready to buy a car
Another tip is to do a bunch of research and not go to the dealership until you’re ready to buy.
“Do so much research online, like email different vendors in the same city, look at their inventory online, see what they have,” Moody said. “You can shop them against each other and see which is the better deal.”
Look at feature packages and decide in advance what the right price point is, rather than waiting to hear about extras you can add from a commission salesperson, he said.
If you’re willing to be flexible about a few things, like having several colors you’ll buy instead of settling on one, you’ll be able to find a car you like at a better price than if you are set to a specific set of options.
“You can definitely get the car you want. You might have to order it, and that might mean waiting six weeks,” Moody said.
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Make a connection with an expert
Moody also recommends finding an “in” at the vendor or market you’re shopping at so you can learn the ropes and find an experienced guide.
“Try to have a relationship with a dealer or a vendor that’s in your town. Email them asking a bunch of questions, you know, how to get them to the point where they want to help you,” he said. . “I think you do better that way than a random person.”
And of course buying used will be cheaper, especially now, Moody said.
“There are more than twice as many used cars available as new,” he said.
Moody also said that if you have a lease that’s about to expire, your best bet is to buy that car and not try to trade it in for something else.
Will new car prices drop?
The average price of new vehicles in the US hit a new record in July, according to data from Kelley Blue Book.
The average transaction price rose to $48,182 in July, beating the previous high of $48,043 set in June.
“It’s still a seller’s market,” Rebecca Rydzewski, research manager of economic and industry insights for Cox Automotive, said in a news briefing earlier this month. “New vehicle inventory levels are better than a year ago, but remain historically low, and that is keeping new vehicle prices high.”
“We see signs of softening in used car prices. However, I think it will be 2023 before we see softening in new car prices across the board,” Moody said. “Of course, this will vary model by model and brand by brand.”
What new rules is the FTC proposing?
The FTC has proposed a rule to ban junk tolls and bait-and-switch advertising tactics that can harm consumers throughout the car-buying experience.
“As car prices rise, the Commission is seeking to eliminate tricks and traps that make it difficult or impossible to comparison shop or leave consumers saddled with thousands of dollars in unwanted unwanted fees,” the agency said in a news release. in June.
The FTC is seeking comment on proposed measures that would:
Stop bait-and-switch claims: The proposal will stop dealers from making a series of misleading advertising claims to lure potential car buyers.
This deal fraud may include the cost of a vehicle or financing terms, the cost of any additional products or services, whether the financing terms are for a lease, the availability of any discounts or rebates, the current availability of advertised vehicles, and whether a deal financing has been finalized, among other areas.
Once in the door or on the hook, consumers face the consequences of false promises that don’t come true.
Stop Fraudulent Junk Fees: The proposal would prohibit dealers from charging consumers unwanted fees for additional deceptive products and services that provide no benefit to the consumer (including “nitrogen-filled” tires that contain no more nitrogen than normal air).
Stop unexpected junk fees: The proposal would prohibit dealers from charging consumers for a surcharge without their express, written consent and would require dealers to inform consumers of the price of the car without any optional surcharge.
Request full advance disclosure of costs and terms: The proposal would require dealers to make key disclosures to consumers, including providing a true “offer price” for a vehicle that would be the full price a consumer would pay, excluding only government taxes and fees.
It would also require dealers to disclose information about optional extras, including their price and the fact that they are not required as a condition of buying or leasing the vehicle, along with providing consumers with key information. about financing conditions.
Will the FTC’s new rule help curb “theft”?
“The thing that people are responding to, and what the FTC would be responding to, is that people are feeling in some cases, ‘What I saw advertised is dramatically different than what I’m seeing in front of me now,'” Moody said.
Again, he said, researching what cars a dealer has in inventory and what they’re listing them for in your area can help avoid sticker shock when cars on the lot cost more than advertised on national TV.
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