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Curious if it’s a good time to buy a car? Maybe you’re wondering if there are some bargain car prices right now. The answer: it depends.
While the list of retailers filing bankruptcy continues to grow as a result of stay-at-home or shelter-in-place orders, automakers, and dealerships hope to avoid the same fate by offering special financing, incentives, and tax breaks as a way to entice consumers back to the car lot.
To help you decide if it’s the right time to buy a car, I’ve got answers to ten of the top car-buying questions.
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1. Will there be a shortage of new cars for sale from Ford, GM, and Chrysler?
Yes, there will be a shortage of cars due to a couple of reasons. The nation’s largest automakers, Ford, GM, and Chrysler, haven’t been able to produce cars for a couple of months due to plant shutdowns, and even with an unemployment rate of almost 15%, consumers have continued to buy cars during the pandemic.
Although all three manufacturers recently reopened plants around the nation, it’ll take months before production is back to normal.
2. Is it a good time to buy a new car now or should I wait?
Yes, automakers and dealerships are offering a bunch of great deals. If you are in a good financial position, now is a good time to buy a new car.
I know buying a car is a huge investment and the idea of spending tens of thousands of dollars may make you question whether you should wait. No one knows for sure what car buying will look like in the foreseeable future. Chances are, automakers will reduce or eliminate the number and amount of incentives sooner than later, causing higher sticker prices.
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3. How low are car loan rates today?
Although the average car loan currently ranges from 5.68% (for shoppers with 750 or higher credit score) to 20.01% (for shoppers with a credit score of 451 – 599), the lower the interest rate, the more you save.
If you’ve got an excellent credit score, you might be able to grab a new car with no interest at all. Several automakers are offering zero-percent financing on certain vehicles such as:
- 2020 Buick Encore (0% financing for 84 months)
- 2020 Nissan Altima (0% financing for 60 months)
- 2020 Chevrolet Equinox (0% financing for 84 months)
- 2019 Ford F-150 (0% financing for 84 months)
PRO TIP: Deals, incentives, and promotions vary month to month and between regions and dealerships. Auto loan offers are subject to approval and will depend on your credit score and other factors.
4. Are there still tax breaks or rebates for hybrids?
Many states along with private companies (local power companies) continue to offer long-standing incentives for hybrid and electric vehicles, based on your income from the previous tax year. You have to check by state, as these also tend to expire or are capped at a certain amount.
- California Clean Vehicle Rebate Project: Apply for a rebate before you buy a new car, or if you go through a dealer, have them apply the rebate towards your lease or loan.
- Colorado gives a tax credit up to $4,000 in 2020 for a new car purchase
- Texas Light-Duty Motor Vehicle Purchase or Lease Incentive Program: For qualifying cars purchased after Sep. 2019, get a rebate up to $5,000.
- New York Drive Clean Rebate Program: For qualifying hybrid or electric vehicles, get a rebate of up to $2,000 at the point of sale for a leased or bought new car.
The federal government also offers tax credits for clean air vehicles, up to $7,500! If you plan on itemizing your taxes, selling a house, or cashing in stocks in 2020, this could be an enormous benefit.
And, a few states recently introduced incentives for things like hybrid/electric charging rates. To check if your state or local power company has any new incentives, you can visit the U.S. Department of Energy website.
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5. What payment options are available?
Most auto loans are from three to five years or 36 to 60 monthly payments; some even extend to six or seven years (72 to 84 monthly payments). Carmakers are also offering deferred first payment options for new car buyers.
This payment plan comes with no late fees and won’t have a negative impact on your credit score. The deferment period could range from three months to four months.
- Jeep has no payments for 90 days
- Cadillac will defer payments for up to 120 days
- Lincoln will defer payments for up to 120 days
- Volkswagen has no payments for up to 120 days
6. What are the best new car incentives?
As new car sales recover, automakers continue to offer generous car deals.
- GM offers a First Responders discount, which can be combined with most current offers for an even greater deal.
- For other new car buyers, it’s best to watch for a combination of cash rebates or loyalty bonuses, along with low-interest rate or zero-percent financing.
Vehicle pricing can be confusing, so if you’re not sure which incentives provide the best savings, try Edmunds Low APR vs. Cash Back Calculator.
7. How can I buy from a car dealership if I can’t visit the showroom?
In response to the pandemic, car dealerships from across the country have turned to online and over-the-phone sales.
If your local dealership doesn’t offer these options and you’re unable to visit a showroom, check out car-buying online services like Carvana and Cars Direct. They offer both new and used vehicles, incentives, and financing, similar to dealerships, and can provide touchless delivery or pickup options.
PRO TIP: Credit unions are becoming a great car buying resource. From offering low interest car loans and shopping multiple dealers for you to get rock bottom prices, to getting bids on your trade-in and having your new car delivered right to your local credit union location, they do it all.
8. Are used car prices dropping?
Yes, because the demand for used cars has been low, there’s an excess inventory that will need to be moved out to make room for returned leases and vehicles from rental car companies, like Hertz, who just filed for bankruptcy. Hertz isn’t selling cars yet, but stay on the lookout. Here are some great used car buying resources:
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9. Will my car have a high trade-in value?
Although you can grab a used car for significantly less than you would’ve paid before COVID-19, if you need to trade in your current car, don’t expect to get much. With used car lots full, dealerships are needing to move used cars out, not in.
You can get an estimate for your car’s value on TrueCar.com or KBB.com.
10. Is now the best time to buy a used car?
Yes. A cheaper car price means a lower or no car payment and may help prevent you from getting into trouble with late or missing payments if your financial situation changes before the nation emerges from the coronavirus lockdown.
Don’t Scroll Up! Here are the articles I mentioned:
Best AAA Membership Discounts to Help Get Your Yearly Fee Back
Nearly Free Gas Is Actually Possible Right Now
Prices Have Changed a Lot for These Items