That’s the question a listener to money expert Clark Howard’s podcast recently asked.
Should I rent a vehicle now?
With the inflated prices for new and used vehicles today, you may be considering leasing a vehicle and then buying it after the lease ends.
Clark says it’s okay to consider renting a car right now corn told the listener, “It sounds like you’re creating unnecessary complications in your life, because rental costs will be inflated as will purchase costs.
Should I buy a new or used vehicle now?
For years, Clark has recommended buying used vehicles that are about three years old so you don’t have to eat up the initial depreciation. But because of the current market, Clark has advice that deviates from what he previously said:
“Right now, it makes sense to buy new instead of used with ridiculously inflated prices for used vehicles,” Clark says.
“I can’t think of another time in my career…that buying new has potentially been – especially for owners with long ownership cycles – generally been a better decision right now, in the second half of ’21 and now in ’22, than buying a one- or two-year-old used car,” he says.
How do you compare new and used car prices?
For example, the prices of a 2022 Honda Accord on Edmunds.com range from $26,000 to $38,000 depending on luxury features. I found a brand new LX model for $27,135.
I found prices on CarMax.com for used Honda Accords, model year LX 2020, which range from around $26,000 to nearly $37,000.
How to buy a new car right now
Don’t waste your time thinking about buying vehicles you can’t afford. The crucial first step is to prequalify for a car loan with a credit union or online bank.
Once you’ve secured financing, you can shop with confidence because you know How many car you can buy.
Do your research
You no longer need to physically visit parking lots, although you can if you wish.
The best car buying websites make it easy by displaying their inventory online. Once you’ve chosen a few candidates, schedule your test drive to see if you like the car.
Keep in mind that you may have to make concessions on make and model. If you really want a leather interior, you might be able to save some money – and time – by going for a car with a cloth interior (which should be a bit cheaper).
Plus, instead of other luxury features, you can increase your chances of getting the make and model you want by settling for a vehicle with fewer bells and whistles.
Learn more about buying a new car.
Clark says that even if you plan to lease a vehicle, you’ll pay more due to the high prices in the auto industry right now. And although he generally prefers that you buy a used vehicle, the fact that some new cars are currently cheaper than their older models makes it possible to opt for new vehicles in this market.
“Right now, one-year-old vehicles are generally selling for more than what people pay for them new,” he says. “It’s really weird. And that’s why if you can wait for a new one to arrive – that’s why people pay more for used ones because you can get it that day rather than waiting for a new that you order – it’s really better to buy new rather than less than a year old.