It’s no secret that new car prices are through the roof, thanks to the worldwide microchip shortage and other supply chain issues that have limited new vehicle production. With new car prices skyrocketing to an average of $47,000, there has been a trickle-down effect, resulting in used cars also becoming more expensive.
Currently, the average cost of a used car is a staggering $27,500. What’s more, not only are pre-owned vehicles extremely expensive, but they’re also hard to find. Many dealerships still have little to no pre-owned inventory sitting on their lots.
But purchasing a decent used car in 2022 isn’t impossible—you just need to know where to look and how to approach the buying process.
Tips for Buying a Used Car in 2022
Despite the fact that cars are both scarce and expensive right now, you might find yourself in the market for a pre-owned model. If that’s the case, there are some tips you’ll want to keep in mind while conducting your search.
Expand Your Search Criteria to Include Private Parties
Many dealers have limited pre-owned inventory right now—and what’s available tends to be ultra-expensive. Because of this, it’s a good idea to expand your search beyond retail outlets and look toward private parties.
There are many websites where both dealers and individual sellers can post vehicles for sale. Some of the most popular include Facebook Marketplace, OfferUp, eBay, and (you guessed it) Craigslist. There’s also an aggregator of online used car classifieds, called AutoTempest, that allows you to search various websites at the same time.
Of course, if you’re buying through a private party, you won’t be able to get a loan onsite like you can through a dealer. Instead, you’ll need to get financing beforehand (unless you’re paying cash) through a bank, credit union, or finance company.
Watch Out for Red Flags
While searching through online used car classifieds, you’ll want to be aware of red flags that point to a car potentially being a clunker (or worse yet, a scam). Here are a few warning signs to watch out for:
- A rebuilt, reconstructed, or salvaged title: A branded title of any kind means the vehicle has been declared a total loss by an insurance company—due to significant damage from a collision, flood, etc.—and someone bought the vehicle back and repaired it. But exactly how well that repair was performed is anyone’s guess. That’s why any car you’re considering should have a clean title—period.
- Any vehicle that “just needs a tune-up” or other minor repairs: It’s easy to be tempted by a car that’s offered at an abnormally low price because, supposedly, it just needs some minor repairs. One of the common lines you’ll come across in classifieds is that a vehicle “just needs a tune-up”, which usually means it really needs an engine or other major repairs. Be realistic—if the car only needed a couple of minor fixes to be a creampuff, the owner would have already taken care of those problems.
- Deals that are too good to be true: There are a lot of scams out there, such as people willing to sell showroom condition cars for pennies on the dollar—out of the “goodness of their heart” (as long as you wire them the money). Be careful—you don’t want to get so wrapped up in your quest for a car that you lose track of common sense.
Get a Vehicle History Report
Regardless of whether you’re considering buying a car from a private party or a dealer, you’ll want to obtain a vehicle history report from CarFax or a similar provider. Vehicle history reports document accidents, service records, and other data that will help you make an informed decision regarding your potential car. Most dealers will provide you with a complimentary report and may even post a link to the report on their website.
Obtain a Pre-Purchase Inspection
A pre-purchase inspection is just what it sounds like—a service where a professional inspects the vehicle you’re considering buying. Although a pre-purchase inspection doesn’t necessarily guarantee that your car will be trouble-free, it does provide a significant level of protection and reassurance. You can get a pre-purchase inspection at most repair shops or through a nationwide inspection agency.
While most private sellers are open to you getting a third-party inspection, some dealerships may object since their mechanics have already looked the vehicle over. Still, if you have any doubts about the condition of the car, you might want to have it looked over by a third party, regardless of the dealer’s stance.
Consider Selling Your Old Car Outright Instead of Trading It In
If you’re considering buying a car from a dealership, you’ll have the option of either selling your old vehicle outright or trading it in. These days, dealers are willing to pay top dollar for trade-ins, but you’ll usually still get more money by selling your old car outright, especially in the current market. Dealers might give you the wholesale value for a car, whereas you’ll typically get somewhere between the wholesale and retail values if you sell it yourself.
Obviously, trading your car in is much more convenient than selling it outright, though. Selling a car on your own can be tricky, so you’ll want to check your local DMV’s website for the steps you need to take to complete the transaction legally and safely.
Resist Feeling Pressured to Buy
Lately, the headlines have been abuzz with news of a limited number of used vehicles and sky-high purchase prices. But there are still many pre-owned cars available, so you shouldn’t let yourself get pressured into buying the first one you see. Instead, take your time and make sure you find a vehicle that’s right for you.
Be Sure to Take a Test Drive
Be sure to test drive every vehicle that piques your interest. A test drive is necessary because it gives you a chance to decide whether a car is a good fit for you and your lifestyle. Also, taking a spin gives you a chance to notice glaring defects, such as illuminated warning lights and disturbing noises. If you spot any problems, you can rule that particular vehicle out and move on to the next.
Consider Waiting to Buy
Most experts agree that the worst of the used car inventory crisis occurred in 2021, but the problem is expected to last through most of 2022. The good news is that some believe the market could stabilize somewhere between the end of 2022 and the beginning of 2023, causing used car prices to drop 20%-30%.
As such, it might be a good idea to wait to purchase a used car, though that’s not a possibility for everyone. But if you’re able to wait, you’ll likely get a better deal and have a more enjoyable buying experience.