New car on a dealer lot.

Dealing With Rising Vehicle Costs

An unexpected consequence of the pandemic has been the huge increase in automobile prices. If you have thought about making a vehicle change or have been forced to due to an accident, you have probably noticed the current state of the market. Vehicle costs are high and they will not come down for some time, so we need to deal with it. Here are some ways to do just that.

There is little that we can do about the fact that vehicle prices are soaring. It is just yet another side effect of a pandemic that really does not want to go away. All that we can do is try to cut some related expenses in order to make ends meet. Here are some ways to do that.

1) Learn To Negotiate Better

For the most part, you will be unable to change the purchase price by any significant margin. You are simply going to pay more for a vehicle than you would have several years ago. That being said, negotiations will still be very important because there are a lot of ways for a dealership to take money from you.

After you have settled on a purchase price, the negotiations are far from over. Next comes your trip to finance where interest rates, add-ons and extended warranties are thrown into the mix. Your dealer will try to take additional profit on all of these extras. Even that seemingly innocent GAP insurance policy will be padded by 200 dollars or more to make the dealer more money.

By the time you get to finance, dealers know that you are tired and just want to leave. Don’t take the easy way out and accept the extra charges, because it could cost you thousands. Take the time to negotiate everything, especially the interest rate they offer you. This might mean spending 2 to 3 hours in finance instead of 1, but the time will be well spent.

2) Choose A Cheaper Vehicle

With vehicle prices soaring, downsizing makes sense, but you can do this smartly and still remain in a similar vehicle.

If you want an SUV for example, perhaps choose a domestic model instead of a luxury version or shop the used market for a lower price. Another option is to simply cut the trim level. Do you really need all of the bells and whistles that come with a Platinum model or is that just money out the window?

In any case, if you want to make your budget work, you might have to settle for less vehicle than you have come to expect.

3) Shop Your Auto Insurance Policy

What about that auto policy? If you have not changed carriers for years, you are probably paying more than you need to.

Insurance companies have a sneaky way of slowly raising their rates over time, all the while saving big discounts for new clients. Become one of these new clients by getting at least three other quotes from carriers. This is easy to do online and in less than an hour, you could be hundreds of dollars richer.

To make the savings even more significant, be sure to look for other discounts. If you drive limited miles, that could be a discount. Have multiple policies, that could be even more money saved. Don’t be afraid to push your agent for creative ways to cut that premium down.

4) Wait It Out

Last on the list is simply waiting it out. Do you really need a new vehicle right now? All signs point to vehicle pricing coming down in the future, so being patient might be the best choice if you want to have a balanced budget or maintain your vehicle status.

The current state of the market is largely based on a supply and demand problem. With supply chain issues and part shortages, manufacturers are just not capable of producing as many new vehicles. Even if you are not buying new, this problem trickles down to everyone because less people are trading in their vehicles and more people are forced into buying used. Even rental car companies are purchasing used vehicles at auction to fill in the gaps.

What this means is that the cost of all vehicles is high right now, but it will eventually settle. Waiting might just be the right way to go.

Wrapping Up

Unfortunately, there is little that we can do to significantly reduce the price of automobiles and transportation in the short term. It is estimated that the average new car price has increased by over 12 percent in the last year. That is roughly 5000 dollars, a tough financial pill to swallow.

Hopefully, you are in a good position where you can “wait it out” but if you must make a purchase, do so carefully and use the tools above to reduce your costs as much as possible.

Posted by
James Car

James Car is a finance, loan and budget expert based in the United States. After attending Brookhaven college, he went on to become a successful entrepreneur. He now enjoys writing articles that help people save and make the most of their money.