Prices on both new and used cars have soared since the beginning of 2020, and experts aren’t expecting them to fall anytime soon. Here’s what you need to know about the current auto loan market and how to navigate it successfully.

Why are auto prices so high?

When the pandemic hit American shores, demand for new and used cars shot up. This was the result of many avoiding public transportation for safety reasons. The mass exodus from big cities and their high infection rates also boosted the demand for new cars.

At the same time, the supply of new and used cars dried up, thanks to the following:

• The pandemic halted the production of new vehicles for a bit, drying up sales and their subsequent trade-ins.
• The production freeze prompted a freeze in the manufacturing of chips for automobiles and auto parts.
• Business and leisure travel paused for months, leading to a steep decline in car-renting travelers. This led to rental agencies holding onto more cars instead of selling them to used car dealerships.

The rise in demand and shortage of supply naturally triggered a steep increase in prices of both new and used vehicles.

Rethink your auto purchase

If you’re in the market for a new car and the price tags are scaring you, consider holding onto your car for a little longer until the market stabilizes.

Make your vehicle last longer with these tips:

• Use a trickle charger to keep the battery in excellent condition.
• Change your filters regularly.
• Follow the service schedule.
• Keep all fluid levels high.
• Avoid sudden braking.
• Replace spark plugs when they begin showing signs of wear or melting.
• Check your tires regularly and rotate and inflate them as needed.
• Pay attention to all warning lights.
• Have your car rust-proofed.

Refinance your current auto loan

While you’re waiting for the market to stabilize, take a look at your current auto loan.  If interest rates have lowered or your credit has improved, consider refinancing your auto loan at a lower interest rate.  Refinancing can lower your monthly payments and boost your savings for your next car purchase.

Tips for buying a car in today’s market

If you’ve decided to go ahead and buy a car, it’s best to adjust your expectations before starting.

First, a seller’s market means many dealerships will not be as eager to close a deal as they had been. This can mean unwillingness to budge on a price or a refusal even to negotiate.

Second, expect to pay much more than usual for your new set of wheels. If you’re looking for a new car, plan to pay about $40,000. A used car can run you $23,000. You’ll also have slimmer pickings when making your choice than you may have had in the past.