One good thing to come out of the pandemic is that rates are at the lowest they’ve been in years and retailers are giving drastic mark-downs, to entice shoppers to start spending again. So, you can definitely find some good deals.
This also applies to big-ticket items such as homes and cars. Now’s a great time to get a good deal on a purchase or refinance. We’ve all seen the commercials – dealerships and manufacturers are doing everything they can to move cars off their lots. As a consumer, you have negotiating power with a dealership!
But, does that mean you should buy a car right now? Each person is different – each situation is different so consider a couple of things.
How secure is my job?
Even though we’ve all been staying home more, that isn’t what’s keeping people from buying cars. A lot of people are concerned about their job situation. Many have faced furloughs or layoffs and a lot are worried about a future layoff or furlough.
Job stability is a very real concern. In May, the U.S. unemployment rate fell to 13.3%, with a gain of 2.5 million jobs because employers brought back millions of workers after the pandemic-induced layoffs. That’s good news but many are still concerned because tens of millions remain out of work, and the unemployment rate remains higher than in any previous postwar recession.
Also, many Americans are still living paycheck-to-paycheck which makes it very difficult to weather any disruptions to income due to health or layoffs. A survey by Bankrate showed that 63% of Americans did not have sufficient savings to pay for an unexpected expense of $500. According to a pre-pandemic survey from the First National Bank of Omaha, 53% of respondents said they do not have an emergency fund that covers at least three months of expenses. And, 49% of Americans say they expect they will be living paycheck to paycheck this year. That number has probably gone up considerably post-pandemic!
If you’re thinking about buying a new or used vehicle, take a very close look at your finances to make sure you can handle the financial stress of adding a new payment to your monthly budget.
If you are sure your job is secure, then you can think about buying a car. If you have any concerns about reduced hours or a potential layoff, be very cautious about taking on new debt. You might get a good deal on a new vehicle but it won’t be worth it if you can’t make your payments and your face a repossession.
Are you Prepared to Buy a Car?
Even if your job is secure, we don’t recommend running out to the dealership to start shopping. The CDC is still recommending social distancing so we’d encourage you to do all of your research and car shopping online. Use our free auto shopping tool to research and compare vehicles, calculate your monthly payment, find a dealership, and get pre-approved for your auto loan.
After you’ve been preapproved, comparison shop so you know which dealership can give you the biggest bang for your buck. If you’re buying a used car, use the Kelley Blue Book advisor tool and also download the CarFax report to make sure you’re getting a quality vehicle for your money.
Most car experts agree that 2020 is the year to buy a car. This car buyer’s market will last for several months, perhaps through the end of 2020 so don’t feel pressured to buy now. Make sure you have a stable financial situation, start your preparation, and then wait to find the car you like with the deal you like. At Members Trust, we are committed to helping members make the right financial decisions. Contact us to discuss your options.