So he’d much rather you do all you can to keep the car you have. But if you have no other choice than to buy a vehicle right now, he wants to make sure you don’t get ripped off.
In this article, we’re going to tell you whether it makes the most financial sense to buy a new or used vehicle or to lease one in the current car market.
How Do New and Used Car Prices Compare?
Just one example of how the car market has been turned on its head: In some cases, used cars cost even more than new ones.
As of mid-September 2022, prices for a 2022 Honda Accord on Edmunds.com range from $26,000 to $38,000. I found a brand-new LX model for $27,615.
Here’s what I mean about used cars: I found prices on CarMax.com for used 2020 LX Honda Accords that range from around $27,000 to nearly $34,000.
Should I Lease a Vehicle Right Now?
Because of the inflated prices of both new and used vehicles, you may be thinking of leasing a vehicle and then perhaps purchasing it after the lease is up. Clark’s putting the brakes on that idea.
“Leasing doesn’t solve a problem at all,” Clark says. “In fact, leasing right now compounds it, because the underlying interest rates are higher and dealers are able to get lease payments higher than they have historically been.”
Should I Buy a New or Used Vehicle Right Now?
For years, Clark has recommended buying used vehicles that are around three years old so you don’t have to eat the initial depreciation. But the current market has changed his recommendation.
“If I had to make a call right now between leasing a car, buying new or buying a car that’s just one [or] three years [old], I would buy new,” he says.
And here’s his advice that might surprise you even more. Clark thinks it could make sense financially right now to travel to buy a car. You may be able to save hundreds of dollars more than the trip costs.
“What I also would be willing to do is buy an airline ticket. Because right now in the new vehicle market, there are enormous differences in what individual dealers are doing with their new vehicle inventories,” he says.
How To Shop for a New Car Right Now
Travel To Save
“Today, with the ability to buy a cheap one-way airline ticket pretty much anywhere, as far as you’re willing to drive that vehicle back to where you live, that’s your shopping market,” he says.
“I’d say for a lot of people, when you’re looking at the second-largest expense in your life, your range of search should be 500 miles,” Clark says. “You can think of it just simply as 10 hours away, although 500 miles probably isn’t going to take you 10 hours.”
“A one-way airline ticket is cheap, but, you’ve got to make sure you’ve got a real deal,” he adds. “Are you willing to drive 10 hours to save thousands of dollars?”
You may increase your chances of getting the make and model you want by settling for a vehicle with fewer bells and whistles than your first choice.
You may really want a leather interior, but you may be able to save some money — and time spent searching — by opting for cloth instead.
Work Out the Financing
Don’t waste your time thinking about buying vehicles you can’t afford. The crucial first step is to get pre-qualified for a car loan. Clark recommends that you include a credit union when you’re shopping around for the best rates.
Once you get the financing worked out, you can shop with confidence because you know how much car you can buy.
Do Your Research
You don’t have to visit car lots physically anymore, although you can if you want to.
The top car-buying websites make it easy by showing their inventories online. Once you’ve chosen some candidates, schedule a test drive to see if you like the car.
And a final step: once you’ve found the make and model you want and given it a test drive, go back online to see if it’s cheaper somewhere else (remember that trip Clark recommended?).
Clark says even if you consider leasing a vehicle, you’ll pay more for it because of the car industry’s overall high prices right now. And while he usually prefers that you buy a used vehicle, the fact that some new cars are currently cheaper than their older models makes it OK to opt for new.
“Right now, one-year-old vehicles are usually selling for more than what people pay for them new,” he says. “That’s freaky weird. And that’s why if you can wait for a new one to come in (which is why people are paying more for used ones: because you can get it that day versus waiting for a new one that you order), it’s really better to buy brand new rather than one-year-old.”