Last year the COVID-19 pandemic hit the whole world and after months of lockdowns and restrictions America is currently facing a very unusual crisis – the country is facing a severe shortage of new cars. It may be the first time in history that buyers are lining up at car dealerships with cash, ready to be marked up, but automakers just don’t have cars to deliver. And this strange situation has caused the prices of used cars to skyrocket. So if you are planning to buy a cheap car like a Used Chevrolet Bolt, now maybe it won’t be as cheap to you as you would like.
In 2020, car sales fell and the industry suffered. There were no sales, lockdowns meant people weren’t coming down, dealerships had to shut down, and even assemblies had to shut down production. Cash-strapped automakers and other related industries had to lay off a few employees and it was a bad time.
However, as things started to return to normal, demand for new cars skyrocketed. Cash-rich buyers were crowded showrooms to get a new car and no one in the auto industry had ever foreseen and predicted such an increase in demand and almost everyone was taken by surprise. After a year of confinement and a year of sitting at home, not spending so much on vacations, parties and travel, many people had a fair amount of money in their accounts.
In addition, the stimulus checks from the federal government happened and a lot of people just found out they had extra money and what’s a better way to spend it on a new car? As a result, many lined up in showrooms for new cars only to find that the dealerships had very low and limited inventory than usual.
The most important factor that has contributed to low stocks and declining production is the massive shortage of semiconductors. An average road car has hundreds of electronic components, and almost all of them are driven by microchips and semiconductors. Semiconductors are made from silicon, but silicon is also used to make COVID-19 vaccine vials. With the increase in vaccine production around the world, significant amounts of silicon have been diverted into vial manufacturing.
So the production of semiconductors and microchips took a hit and it brought the production of cars to a halt again. Many car manufacturers have had vehicles immobilized on their lines waiting for electronic items to integrate for months! Many automakers have had to take drastic action and cut down many features of their vehicles to keep up with semiconductor inventory.
All of these factors have led to a huge shortage of new cars and many buyers are turning to buying a used car. As a result, the demand for used cars has increased and so have the prices. Used car prices have jumped more than 20% compared to last year and the average used car transaction amount is around $ 25,400 now, up from $ 20,900 last year. And it may not seem like an ideal situation to buy a car, but you can still reap profits and make a good financial decision even at a time when there are shortages and car prices have skyrocketed.
First of all, if you are looking for a new car or even want to upgrade your existing car, you may just get some great trade-in value. Dealers are willing to fork out cash to buy used cars and if you have one you could end up getting a much better deal than usual. Many dealers have called their customers who they sold cars to a few years ago, asking if they would like to sell their current car and queue for a new one. Dealers everywhere are in a great need for used cars and it could be a great opportunity to make a profit by trading in your used car at a higher price.
Second, to distract buyers of new cars, many car manufacturers offering lower APR rates on factory certified used cars than new ones. For example, Toyota offers an APR rate as low as 1.9% on used Camry, Corolla and RAV4 vehicles, while the lowest rate on any new Toyota in the country is not less than 2, 9%. Now, if you are looking to finance your car, buying a new car at a high interest rate just doesn’t make sense.
Take advantage of the lower interest rates on the used ones and this would help you save a lot of money. Also, some people sold their existing car for a new one because they were getting a good trade-in price and as a result there are many new, well-maintained, low-mileage cars in the used car market that you can get. at a much cheaper price than a new one.
Now, if you already have a rental car, we recommend that you consider a lease buyout. If you are nearing the end of your lease cycle, you could get a very low buy-back price compared to buying the same used car from a dealership. The value of the vehicle at the end of the rental cycle was calculated years ago when you signed the rental agreement before the pandemic and shortages and that is why the current trends and prices in the market are not there. not apply.
Getting a lease buyout would just help you save a good amount of money rather than buying another used or new car. In addition, you can later swap that car for a higher price and maybe get a new one.
So here are some tips and tricks that could help you save on your next car purchase, even when prices are skyrocketing. You just need to play your cards right and you could end up saving big. So while the shortages are still there and the prices are still high, take advantage of all the perks you can and book yourself a good profit on your next car purchase.
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