Navigating the auto market

So, I was about to graduate from grad school in December and wanted to buy this particular car that’s up like fucking 20% in price even though inflation is up only around 8.5%, and I wanted to ask around to see how one should go about navigating the auto market.

I know generally one should always take out a loan instead of buying up front even if you have the cash to buy a car, because annual ROI on even virgin index funds will—on average—be greater than the interest rate on a loan you may take out. I also understand that inflation is your best friend if you’ve got a loan (assuming your job gives you cost-of-living adjustment annual raises), because you still owe the same dollar amount, but it’s worth less.

How can one be cautious if one wants to buy a car but the high inflation period has already begun? Do you just wait until CPI and PPI go back down and even though the car’s price tag will have a larger number, hopefully your job gave you comparable raises and you can buy when inflation is low again?

Is that the only option or can one be savvy while inflation is high too? I’m gonna be living in downtown Seattle which should be quite walkable, and my workplace is 20 mins away by foot, so I’m fine walking both ways (plus it’s a big tech job so I’ll be WFH most days anyway), but I would still prefer to buy a car to visit friends in the greater Seattle area and not wait for inflation to calm tf down.

Why not buy used from a private seller in cash? Or at least a much cheaper loan. I would recommend toyota/lexus product btw. Lower maintenance costs

The Toyota tax they will pay in Seattle will be insane on the used market. At that point, buying something brand new would be a better idea, imo.

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This, well maintained Toyotas/Lexi under 100K miles will last a long time, especially with your situation. Quality on Ford products built in the last 5 years seems to be good, avoid GM and Chrysler like the plague.

I have a boner for stick shift cars lmao. I was looking at a Volkswagen Jetta bc it’s one of the few models that still comes in manual transmission. I think it’s a better choice in the long run bc it’s cheaper to buy and maintain, so I may just get a used Jetta, but I think the point of inflation being sky high and this being a bad time to take out a new loan still stands so I’m not sure what to do. Like even if I get a cheaper car on a loan, taking out a new loan after inflation has peaked seems like a silly thing to do.

The loan depends on the interest rate, in my case they offered 0.9% which I decided sure why not Anything above 5% if you do have the cash and are able too - I would say use the cash.

If you do go with the loan, and let’s assume you get paid bi weekly like most people - and you decide to spilt the payment into to two - to match your payroll - pay the loan as you have the funds it will reduce the principle and interim the interest charges - better than leaving it in a saving account to pay at the end of the month

Damn, if you don’t mind me asking what kinda credit score must one have to get a bloody 0.9% APR? I’m sorta new to credit (have had a credit history for only 2 years) but have a score in the high 750s, and I’m not sure if I’ll qualify for those low rates.

All depends on what’s out there. Everything is high too so the spread between cars that break often and ones that last shouldn’t be super drastic. I haven’t shopped for years though. I can say costs for service are going to be rough so either get new low mileage and pay the premium or get good cars.

I would also look at Dealer Loaners / Demo’s they are sudo used but could save you 20% off the inflated price. Just accept when you buy a car it is a negative cost investment.

Oh yes I fully acknowledge cars as a depreciating asset and money down a black hole. I just need one for semi-long distance travel, and my dad’s car is like 20 years old so I’m decently confident in being able to make it last long enough. So, in your opinion, should you just take out a loan and ride inflation rather than “time” it right, if you get a cheap used car? Unfortunately, cheap cars have “appreciated” (in quotes because not really accounting for inflation) this year due to inflation, so they’re fucking expensive af too lmao.

What kind of car are you looking for that went up 20%? If you are looking in a major metro that probably has a market adjustment premium. You can buy a new car anywhere in the country and more than likely if you can find it in a more rural setting there probably won’t be as high of a premium. 750 with some credit will qualify you for most manufacturer low apr programs

I recently bought a new vehicle March 29th. A sort of spur of the moment decision, but I had been looking and contemplating for months.

Anyways, several things to take into account to negotiate the best price imo:

  1. Good credit (720+)
  2. Decent downpayment (2000+)
  3. Don’t be afraid of used
  4. Timing (End of Month for best deals)

I now own a 2020 Jeep Gladiator Sport, 41k miles, 2 previous owners, no issues, paying roughly 720/month for 75 months. Sounds awful, but I have 2 future pay increases coming up relatively soon and plan to utilize that to pay off the truck sooner. The longer loan term just means I’m obligated to pay less per month if I were to have a rough month financially then I could still afford it.

  1. Good credit gives you a bit of negotiation when it comes to loan term and potential institutions providing the loans. It also can give you an extremely low APR.
  2. A down payment always helps decrease the amount owed on the loan and can even change your monthly payment per loan term option. I had the option of 0 down for 75 months, but would be paying closer to 850/900. 2000 down secured my current rate and within 6months I may refinance just to get the payments lower in case of financial hardships.
  3. I had been driving a Dodge Ram 1500 Mega Cab starting at 245k miles from 2015 till now. It currently sits at 347k miles and runs somewhat reliably. I’ve had no crazy major issues as of recent, but am somewhat capable of doing maintenance on my truck when things stop working correctly. Older vehicles will cost you less, but can come with their own set of issues if you buy used. My new Jeep I made sure to pull the CarFax to determine what issues it could have, took it for a test drive, and used anything I found as a way to talk down the price. Carmax I’ve heard isn’t great so I went to an actual dealership.
  4. End of month deals are how I got both my vehicles at a good price. These people are desperate to get things out end of month to meet their quotas or even desperate to get vehicles out that have been on their lot for too long. My truck I found in the back lot of the dealership for 10k, talked him down to 8k. The Jeep was on the show lot, but had several small imperfections and talked them down from 43k to 39k.

This was super long winded now that I see it…

It is like 750 ish - moves a bit here and there, when I check in like credit karma and those.
It was through BMW Financial Services, dealer direct - I had to argue a bit because I think they were trying to take some points on me - started @ 1.9%

Keep in mind, most dealers that sell the loan will take some points on the deal - the better the deal the more points they will try and take - they got to make their money somehow. An old friend who is in the car business once told me, those who are really good we make 3k-5k off of. Those who aren’t we get 5k-15k off of.

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I’m looking at a Volkswagen Jetta. I’m p sure all cars (used and new) are up quite a bit this year, so I’m not sure how much of a difference my location’s gonna make; that said I’ll be in Seattle, so probably gonna be looking for neighbourhoods nearby?

You can probably save some money to shop on the net and have car delivered to you. Any major metro has a premium on their cars. My stores are located in the Midwest in semi rural area. We don’t typically have market adjustments on something unless it’s really really rare car Ford Raptor Corvette types.

Carvana and Vroom are ones I see around in Central Florida that deliver to you.

Any reputable dealer in the country will deliver and sell the car remotely we do tons of them every month . If they won’t they probably are living in the 1990s