September 18, 2023 - 6:00 am
Looking to purchase a new car to navigate Las Vegas’ busy streets and highways? Experts provide the latest tips to combat rising prices and interest rates.
First, it’s important to determine what type of vehicle will meet your needs, said Tyler Corder, chief financial officer for the Findlay Automotive Group.
“Focus on the vehicle rather than the deal, initially,” he said.
But the financial aspects of buying a vehicle is also important since the cost of car ownership is rising. AAA estimates the annual costs of owning a new car — fuel, maintenance, insurance and depreciation — is $12,182, or $1,015 a month, which is a 12 percent increase from 2022. For Nevada, it’s estimated the costs are higher at $13,136 per year or $1,095 a month.
Kelly Blue Book estimates the average price of a new car in July was $48,334, which is $199 more than the same time in 2022.
How to deal with rising interest rates
On top of those increasing costs, the rise in interest rates in recent months is making it harder to buy a vehicle, according to Corder.
“It’s been a decade or so with historically low interest rates,” hesaid. “So it’s a little bit of a shock to the system now, instead of getting 2 to 3 percent interest rate, you might be paying 7 or 8 percent.”
To avoid interest rates exacerbating a purchase Corder recommends people try to put as much cash as possible into an initial purchase, and if possible to shorten the length of a loan since shorter loans often have lower interest rates.
AAA recommends people should keep negotiations on trade-in, purchase costs and finance rates all separate.
Buying a used vehicle is usually more affordable than buying a new one, but Corder recommends only buying a used car only if it has the proper certifications and a warranty can be obtained for it.
When trading in an old car for a new one at a dealership, Corder recommends a few small steps that can increase the trade-in value.
“It is amazing to me that a lot of people will come in and want to trade their vehicle and … the vehicle is full of trash, it’s dirty,” Corder said. “Make sure that the vehicle looks good. If you happen to have the service records on it, that’s really valuable to a dealer to know that the vehicle had its oil changed and maintained through your ownership. It’s like telling a story of the vehicle.”
Kelly Blue Book also recommends bringing estimates of a trade-in value to a dealership as well as taking time to ensure any deal or contract doesn’t include any surprise costs or clauses that weren’t discussed with a salesperson.
Lease or buy
When considering looking to buy or lease a vehicle, Corder advises studying the contract. Most leases have annual mileage limits so leasing may not make sense for those who drive more than 15,000 miles a year. However, he said leasing is a good choice for someone looking to get an electric vehicle since it’s a rapidly changing segment of the vehicle market.
“There’s so much uncertainty about the resale value of electric vehicles, it’s anybody’s guess what that vehicle is going to be worth in a couple of years,” Corder said. “(With leasing) you don’t have to worry about whether there’s new technology that’s made your vehicle obsolete.”
Possible UAW Strike
Corder said the current economic trends in the automotive industry should hold steady and now is as good of a time to buy a vehicle as it would be in a few months, but a looming strike with autoworkers could change that.
The United Auto Workers union has 146,000 members that could strike against Ford, General Motors and Stellantis if a new deal isn’t reached.
“That’s the biggest unknown right now is the UAW and whether they go on strike,” Corder said. “If there was a large-scale strike, and it lasted for more than a couple of weeks, that would have a big impact on the availability of vehicles.”