Automotive Research

Smart moves to make when buying a car during the 2022 shortage

With new and used cars in short supply in 2022, these steps can improve your odds of finding the model you want while avoiding excessive dealer markups.

Manufacturing issues are continuing to limit the number of new cars arriving at dealerships. That has raised the price of the cars that dealers do have and has made it difficult to find some models, trims, and colors on dealer lots at all. It has also raised the prices of used cars as buyers and sellers look to make up the gap.

If you're in the market for a car, it's still possible to find what you need—consider making these 7 moves.

1. Be certain you need to buy a car now

Given the limited selection and higher prices, it's not an ideal time to buy. If you don't have a car, or you have one that isn't meeting your immediate needs, you may not have a choice. But if you can delay your purchase, you're likely to get a better deal in the future. (How far in the future? It's difficult to predict, and the market may improve gradually rather than snapping back to normal.)

If you have an expiring lease, for example, consider asking the dealer to extend it another year. Many dealers are happy to do so in the current crunch, since they keep a customer while also saving their limited inventory. 

2. Get preapproved for a loan

Even if you're unsure of what you want to buy, getting the financing preapproved by your bank or credit union can help in a few ways.

  • The preapproval will be for a set amount, which you can use to avoid going over budget (or being talked into it by the dealer). If your budget is $30,000, having a preapproved loan for that much gives you an easy excuse to stick to it.
  • The interest rate from your bank or credit union is likely to be lower than what a dealership would offer you. 
  • Having a preapproved loan shows dealerships you have good credit, and they may offer you an even lower interest rate to win your business.

3. Don't compensate for high prices with a longer loan

If you can't afford the monthly car payments on a 5- or 6-year loan, it can be tempting to bring the payment down by stretching the loan to 7 or 8 years. In most cases, this is a bad idea: Borrowing for longer increases the total interest you'll pay over the life of the loan, and longer loans usually have higher interest rates on top of that. You don't want to still be paying for the 2022 car shortage in 2030.

4. Be open-minded on makes, models, & styles

Buying a car has traditionally meant finding the model you want, with the options package that most closely fits your needs, in the color you like best. While the shortage is an industry-wide issue, it's especially acute for the most popular cars and the most popular automakers since they have more buyers competing for them.

That means that right now, buyers willing to go with trim levels and colors that are less sought-after are more likely to find a vehicle already on a lot, not have to pay a large dealer markup, or not have to wait as long after ordering a car.

This goes for used cars as well as new ones—any time there's less competition, prices are lower.

The AAA Car Buying Service can find used car listings by make and model, or generally by vehicle type. Search listings of used cars

5. Can't find the car you want? Order it

If you've got your heart set on a particular car—especially if it's a popular one—and you can't find it at a reasonable price (or at all), another option is to order it with a dealership. While ordering ahead isn't likely to get you a discount on the car's retail price, it can help you avoid a large dealer markup on all but the most desired vehicles.

Just be sure you're willing and able to wait: The lead time between order and delivery can currently run as long as 4 or 5 months for models in high demand, as compared to 6 to 8 weeks in normal times. As mentioned, a potential way to reduce the wait is to ask the dealer if there is a model and/or style that is likely to be delivered sooner, and see if that's close enough to what you're looking for. 

6. Trade in your current car if you can

The surge in car prices has led to a surge in trade-in values, too. Dealerships are looking for inventory wherever they can find it, and some traditional sources of used cars, especially sales from rental company fleets, have slowed down as the recovery picks up. 

Of course, selling one car to buy another when prices are high for both may effectively cancel out, depending on what your trade is worth—the newer and better condition it's in, the more it will help. But if you have to buy now, it's the most straightforward way to bring the price down.

7. Compare listings to determine a fair price

For new cars, the manufacturer's suggested retail price (MSRP) has traditionally been the standard to which markups or discounts are compared. In light of the current shortage, dealers can add hefty markups (in extreme cases, as much as doubling the price) and at least a few buyers are willing to pay them.

That makes the MSRP more of a floor at the moment—if you can find what you want without markups, that's about as good a deal as you'll find. Otherwise, you'll need to compare what different dealers are charging to get a sense of what a "reasonable" markup is on the vehicle you want.

Comparison has always been important when shopping for a used car. Buyers have long relied on tools such as the Kelley Blue Book to determine a fair value, but with prices in extreme flux, looking directly at comparable listings is likely to be more helpful and accurate.

AAA's Car Buying Service can find listings in your area to compare prices.

RELATED: 6 tips for buying a used car

Looking for a dealer you can trust?

AAA members can enjoy a great car buying experience with AAA Car Buying Service. Find the car you want from a certified dealer and feel confident in the price you’re paying.

AAA Car Buying Service is only available to AAA members. Outside of Southern California, AAA Car Buying Service is managed by TrueCar, Inc. Only car buying research tools are available in Hawai‘i.

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