Why It’s Better to Buy Used Vs. New in Today’s Auto Market
Everything you need to know about leasing in 2022
Buying a new car is literally the worst financial idea you could make in 2022. Don’t do it. Stop. Nobody, literally nobody, is getting a car for the manufacturer’s suggested retail price (MSRP). In fact, most people are paying way over it. Not good.
And, as many of us know, as soon you drive that brand new car off the lot it loses 20% of its value. Not. Good.
Contrary to popular belief, none of this is the dealer’s fault. The car market is a hot mess right now. Supply chain issues, chip shortages, and overall economic inflation have made the car buying process very difficult to navigate.
So, let’s help you do that — and explain why buying a used car, moreover, leasing a used car is the most pragmatic decision in 2022.
What You Need to Know About the Car Market
The main factor at play in the car market is the global shortage of semiconductor chips. These chips are the brain of the car. The chips are not only used to boost engine efficiency and lower tailpipe emissions but are essential for smartphone integration, driver head-up displays and Advanced Driver Assistance Systems.
So, what went wrong here?
The same thing that went wrong for the entire world. The pandemic.
Before the pandemic, companies placed their orders on chips, but abruptly canceled them as COVID-19 struck. Companies like Ford, Jeep, and Chevy believed demand would be hit for a long time. They were wrong. To the entire auto market’s surprise, demand bounced back incredibly fast. Too fast. The factories in Asia (where most chips are manufactured) couldn’t keep up with demand and were unable to restart production in time.
Here’s the rub: All this being said, one automotive sector not negatively impacted by this shortage is the used car sector. These cars are already built and on the marketplace.
Therefore, if you don’t want to be waiting until summer or fall 2022, as some Tesla customers are doing right now for their new cars, you should dive into the used market and find your next car.
How to Find the Best Used Car Right Now
As soon as you sign the paperwork to buy a car it has become a used car and loses a percentage of its value. And don’t get us wrong, a pre-owned vehicle might not come with all the bells and whistles you might want (e.g. color, trim levels etc.) but there are a few key factors to look for to ensure you get the best deal.
Some things to keep in mind when getting a used car are:
- Try to buy used cars that are about 3 years old or less. Doing this ensures you get most of the life, and little of the depreciation.
- Keep in mind, when you buy a used car, you get a much more budget-friendly sticker price. That means lower monthly payments when financing (see next section for more), and lower insurance costs.
- Cars are built completely differently now. They’re more durable and conform to higher standards than cars from the past. Have some peace of mind that most used modern cars can last you a long time.
- Lastly, it’s quite common for cars that were previously leased brand-new to be then re-used as lease vehicles or to be sold outright. Most car leases are only 1–3 years in length, meaning that many dealerships have stocks of nearly-new used cars that are ready to be snapped up again.
Why Leasing is a Great Way to Get a Used Car
Certified pre-owned is the gold standard of getting a used car from a dealer. It often means that you’re getting a lightly used car, typically 3 years old or less, that the manufacturer inspects and vouches for with a warranty. If you choose this option, we recommend leasing it.
Car leasing has become a popular option for those who want to drive a top of the line used/new car but don’t want the high monthly payments that come with it. Leasing a used car brings those monthly payments down even more since the depreciation costs that are used to calculate the monthly lease payments are already down on a used car.
Let’s say you were planning on buying an entry-level trim of a popular sedan like the Audi A4. Your budget suits the newest entry-level model, but also perhaps the upper trim levels of the model from 3 years ago. You can get more creature comforts, better interior upholstery, greater driver assistance and safety equipment, and more, all for the same amount of money.
That’s the big difference between driving leased used cars and new vehicles. When you lease a used car, you’re factoring in the depreciation as well. Therefore, dealers don’t have to charge you as much for it.
Of course, other factors go into the leasing price, but if you want a better car and don’t mind the monthly payments, a lease is a great option to consider.
Final Thoughts
Back in early 2019 dealerships were practically giving away new cars and now that same car is worth thousands more due to the chip shortage and other supply chain skullduggery.
Unfortunately, life isn’t a Back to the Future movie. We have to deal with the messy market factors we’ve been dealt with.
And, keeping that in mind, buying a used car right now is the way to go. Leasing one could be even better if you’re looking for a more budget-friendly option and more flexibility and ease in how to deal with the car after the contract period is up.
When all is said and done, your wallet, your family, and your country will thank you after this is over.
Good luck!
