The road to buying a new—or used—car is anything but smooth. With new models selling for above sticker prices, and used-car prices hitting record highs, it can seem impossible to find a good deal. Here’s what you need to know if you are in the market for a vehicle.

Key Takeaways
1. If you don’t need a large car, consider a sedan

Certain types of vehicles, such as pickup trucks and sport-utility vehicles, are sometimes selling for more than the sticker price, says Ivan Drury, an automotive analyst for the car-shopping website Edmunds.com. If you don’t need a large vehicle, you can likely find a better deal by purchasing a sedan, he says.

2. ​​Look closely at new versus used, as the calculus has changed

On average, new cars are still more expensive than used cars. In June, the average transaction price for a new vehicle was $39,942, an increase of 14% from June 2020, according to the research firm J.D. Power. The average transaction price for a used vehicle was $27,984, up 24% from June 2020. Some consumers who can’t find new models are considering used models with low mileage, says Matt Dundas, director of finance for Carvana, an online used-car seller. If you are willing to buy an older used car, you might be able to get a better deal because you won’t be competing with buyers who will pay more for newer, low-mileage cars, he says.

3. Leverage trading in your old car to help offset the cost of the new car

Even if you have an old car, you shouldn’t assume it isn’t worth anything, and you can use your earnings to offset the cost of your new purchase. The average transaction price for all vehicles sold at dealerships with mileage between 100,000 and 109,999 was $16,489 in June 2021, a 31% year-over-year increase, according to Edmunds.

4. Consider a short-term lease while you wait for the market to improve

If you have to concede on the color, or even the brand, of a car, you might instead consider leasing for a short period to see if the market improves. “If you can’t get what you really want, you might as well just borrow what you kind of want,” says Mr. Drury.

However, 10,000-mile-per-year leases are now the most common and might not be sufficient for some people, says Tyson Jominy, vice president of data and analytics at J.D. Power. “Check to make sure that the mileage will work for your lifestyle as a consumer,” he says.

Read the original article by Allison Pohle here.