Is it the right time to buy a car? This is what Suze Orman says

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You may want to review your plans.

Key points

  • Vehicle prices are high across the board right now.
  • If you can put off buying a car, you might want to go this route.

For some people, owning a car is a luxury. But for others, it is a necessity. If you need a vehicle to get to work, for example, this is an unavoidable expense.

That said, there’s a difference between needing a functional vehicle and needing a better looking one. And if your car is currently running just fine, you might want to think twice about upgrading, according to financial expert Suze Orman.

It’s a bad time to buy a car

On a recent podcast, Orman advised consumers to avoid buying a car right now if possible. The reason? Prices are so high, she says, that consumers are likely to pay significantly more for a new vehicle.

In addition, borrowing rates are higher in the wake of interest rate hikes by the Federal Reserve. So, all things considered, consumers who buy and finance a car are looking to blow their budget, especially when you factor in the cost of car insurance as well.

How much have vehicle prices fallen? In May, the average price for a new vehicle transaction was $47,148, according to new data from Kelley Blue Book.

Last month, car prices rose 1%, or $472, from the previous month. They were also up 13.5%, or $5,613 on average, from May 2021.

In fact, the average price paid for a new car last month was the second highest on record. The only month consumers paid a higher average price for a new vehicle was December 2021, when the average new vehicle transaction price reached $47,202.

Of course, higher car prices also mean higher cost of ownership when factoring in the cost of financing a vehicle. Last month, the average monthly car payment in the United States reached $712, according to market research firm Cox Automotive. This represents a record.

Do your best to wait

If your current vehicle is seriously unsafe or unreliable to drive and you live in a place where having a car is essential, you may have no choice but to buy a car from a higher price and end up with a higher car loan payment. But if you have the option to wait, Orman strongly advises you to do so.

That said, just because you need to replace your current car doesn’t mean you have to pay for a new model. First, you can always go the certified used car route, which is likely to be much cheaper than buying a new car. And if that doesn’t work for you – say, you’re not comfortable driving a used vehicle and want the warranties that usually come with buying a new vehicle – then be smart about the features you pay for in a new vehicle. auto.

You might like the idea of ​​heated seats and a state-of-the-art entertainment system. But if it adds $5,000 to the cost of your car, you might not want to upgrade that much.

Driving is a much more expensive prospect these days thanks to higher gas prices. The last thing you need right now is a car loan payment that’s over your budget.

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