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Thinking about buying a car? Here’s what auto experts say you need to know – CNBC

A customer is shown a 2022 Toyota Prius at Longo Toyota in El Monte, CA on Wednesday, March 23, 2022.

Medianews Group | Orange County Register via Getty Images

People spend a lot of money on their cars and trucks. In fac…….

A customer is shown a 2022 Toyota Prius at Longo Toyota in El Monte, CA on Wednesday, March 23, 2022.

Medianews Group | Orange County Register via Getty Images

People spend a lot of money on their cars and trucks. In fact, about 16% of the average American’s total budget goes to transportation, including vehicle costs and fuel. That makes it the second-biggest expenditure after housing but before incidentals like food, education, and saving for retirement.

The scale of the expense can make shopping for a vehicle stressful – especially for younger, first-time buyers who tend to have less-established credit histories and lower savings.

And today’s market makes it even worse.

According to Kelley Blue Book, the average cost of a new vehicle (including cars, crossovers, vans, pickup trucks and SUVs) exceeded $47,000 at the end of 2021 – up more than 25% in just two years. Average used vehicle prices saw an even steeper rise, going up 42% from under $20,000 at the end of 2019 to over $28,000 two years later. These price increases exceed overall inflation over the same period. They’re due to a production slowdown caused by the pandemic, coupled with pent-up consumer demand and a global microchip shortage.

So, what’s the best way to buy a first vehicle in today’s marketplace?

Where to start the car-buying process

A new buyer’s first step is to determine the sort of vehicle they need, and their budget.

Selection takes some thought. A small sports car might work for a single person or couple, but not if they’re planning on starting a family. A large SUV might be great for camping and road-tripping with friends, but isn’t likely to be much fun when it comes time to fuel up, pay for insurance, or find street parking.

“Think about your actual needs, how long your commute is, how much you have to carry, and if you actually enjoy driving and might want something sporty,” said Ronald Montoya, the senior consumer advice editor and content strategist at Edmunds. “Avoid overbuying – you can probably get by with a smaller vehicle for most of your needs, and just rent something bigger once or twice a year, when you really need it.”

With prices so high, shoppers also need to keep a close eye on their budget. “There is no point in test driving a car if it turns out you can’t afford it,” said Tom McParland, who runs the vehicle-buying service Automatch Consulting and writes about consumer issues and the automotive industry for Jalopnik.

Most experts advise spending no more than 20% of take-home pay on a vehicle, including payments, insurance and fuel or electricity. There are many online calculators to help consumers determine …….

Source: https://www.cnbc.com/2022/04/09/thinking-about-buying-a-car-heres-what-experts-say-you-need-to-know.html

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