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A car can be the second most expensive purchase many consumers make in their lifetime. Securing this high-ticket item has historically been a somewhat painful experience filled with haggling and confusion at the dealership lot. But following the pandemic, many dealers are embracing the shift to online and creating a more seamless buying experience.
If you plan to purchase a vehicle this year, you should prepare for steep interest rates, especially for those with poor credit. But you can also expect more available inventory and more tech to speed the purchase process. Here’s how to buy a car in 2024.
Buying a new car in 2024: What to expect
If you have waited on purchasing a new vehicle to secure a more competitive deal, your patience may pay off. Bankrate spoke with Dave Thomas, director of content marketing and automotive industry analyst at CDK Global, for insight on upcoming trends this year.
Buyers still prioritize prices
If you’re shopping for a vehicle this year, you may use price as your primary focus. That’s the case for 47 percent of buyers, according to the 2024 CDK Global Friction Points survey. Shoppers have been met with record-high price tags over the past few years, but change might be on the horizon.
While these changes may seem slight, with interest rates remaining high, any cost offset can help you secure a more manageable monthly cost.
More vehicle inventory
Following the pandemic, supply chain issues made it challenging for drivers to find the vehicle they wanted.
According to Thomas, increased inventory has “been the biggest driver of change in terms of the shopping experience on the ground.”
In December, over half of shoppers (52 percent) found the vehicle that they wanted in stock, according to CDK — up from just 42 percent in October. Moreover, 73 percent of respondents said finding their desired car was easy, the highest percentage since July 2022.
Car loan costs and availability
However, even with more vehicles available, the landscape is still challenging for some shoppers.
“There are still a couple of problems that make it hard on buyers. The two biggest ones are interest rates and availability of credit.”
— Dave ThomasCDK Global director of content marketing and automotive industry analyst
Interest rates remain high, especially for those with poor credit. This is especially true at the dealerships, which tend to charge higher interest rates.
Shopping around with multiple lender types can help. Credit unions, for example, often offer competitive rates. In December, the average credit union rate for a 48-month new car loan was 6.25 percent, according to the National Credit Union Administration. The industry average rate for the same time was 7.61 percent, according to Bankrate data.
And fortunately, those with solid credit will likely see improving rates this year, predicts Bankrate Chief Financial Analyst Greg McBride, CFA.
Dealing with finances stresses car buyers. Only 61 percent of CDK respondents found applying for credit easy in December, down from 63 percent in November. That’s unsurprising, as Cox Automotive reports access to auto loans is declining.
Buyers and dealers are embracing tech
According to the CDK study, 36 percent of dealers reported using digital retail tools in their showrooms. And buyers are getting on board, too.
Many folks are choosing to handle some aspects of car shopping completely online before entering a lot, Thomas explains.
He says many handle negotiations with the dealer online before heading into the dealership. These shoppers may feel anxious about negotiating the vehicle price in person. Having a firm price going in could be a relief.
Technology has also sped the purchase process. Fifteen percent fewer buyers reported waiting around to sign a contract. CDK points to the use of digital signing tools as driving this decrease.
Combining online and in-person shopping can save consumers’ time.
For example, “each automaker has a different way of calling their trim levels,” Thomas says. “Sometimes they call features completely different things and even some of the safety stuff they call different things which shouldn’t they shouldn’t.”
Online tools can break down exactly what each trim level includes for easier side-by-side comparison. Do that research in advance so you can focus on test driving and hands-on inspection on the lot.
4 ways to use online car shopping to your advantage
Online car buying is still relatively new, and it requires a bit of learning. While some advice falls in line with traditional car shopping, consider these tips when skipping the showroom floor.
In person or not, researching to find the right vehicle is the first step in the car-buying process. Consider what factors matter to you most. Do you care about size, fuel economy or even style and color? While you might not be able to explore your new ride in person, YouTube car tours are a great resource to see the specifics a vehicle has to offer.
2. Set a budget
After you set your sights on the type of vehicle that you want, it is important to figure out how much you’re willing to spend and set a budget. Finding this number takes additional work but is much easier without a salesperson pressuring. Consider all contributing factors, such as your salary, fuel, insurance and additional vehicle costs.
3. Check local inventory
Another advantage to shopping for your vehicle online is the option to check local inventory before going to look in person. This can be done in a few ways. Look at specific dealers in your area — search, for example, “Toyotas sold near me” or use websites like Edmunds or TrueCar. This research will also help in your negotiations because you’ll better grasp the price landscape for your dream car.
4. Chat online with salespeople
Negotiation can be one of the most intimidating aspects of the car-buying experience, but when you’re sitting behind a computer screen, it is much easier to haggle for the price you deserve. Most of the online marketplaces you will encounter will have a chat option. Use this as a space to ask the right questions. Focus on being firm, and share information you found while checking local inventory about competing price options.
The bottom line
It’s clear the car-buying experience has shifted for both the dealer and the buyer following the pandemic. But it’s important to remember that a refresh in the industry is taking place, and it is bringing increased accessibility and transparency to the driver. While car lots aren’t going anywhere in 2024, consider starting your search online to potentially save money and time.