The Perks of NOT Buying a Car

In with the Old, Out With the New

In 2022, newer might not necessarily be better. At least for the auto industry. We like the smell, look, and feel of brand new, but there are a few reasons why hanging onto your old car might be the better option – for now. Read on about the perks of not buying a new car – including that Discovery FCU offers some of the best auto refinancing options in Reading, PA and Berks County. 

Perk #1: New Cars are Far and Few Between

For over a year and a half the auto industry has been plagued by a global, well-publicized supply chain crisis. The initial Covid-19 factory shutdowns plus the following semiconductor chip shortage erased a huge percentage of new cars, trucks, and SUVs from dealer lots. 

This sharp decrease coupled with unchanging consumer demand, means that prices have risen with little to no room for negotiation or incentives. Some dealers are even adding markups for the most popular makes and models. Even if you secure a low interest rate, the initial down payment and monthly payments may very well be more than what you hoped for – and more than what your budget can handle.

It’s also important to mention that many auto manufacturers have noticed their increasing profits during the Covid-19 crisis with consumers willing to pay the higher price point for new cars, and some experts say that car buying will never return to pre-pandemic norms. 

The CEO of Ford Motor has stated as much, saying that tighter inventories would simplify the market and that he wants to move Ford to an order-based system versus consumers buying from the lot. This means you should probably plan on paying a higher price on a new car even when the pandemic is officially declared over.

Perk #2: Insurance and Tax Rates

Auto insurance rates are always higher for new cars versus old cars. Why? Newer cars are more expensive to repair and replace. You will have to add in the higher cost of insurance premiums with the cost of your new car payment. If your “old” car is running well and working well for you, lower rates on auto insurance is a perk you should definitely consider. 

You should also think about sales taxes. In Pennsylvania, you’ll pay about 6% in sales tax on whatever car you purchase. The current average cost of a new car is $47,000. That means you would owe about $2,820 on top of the average new car price. If you can’t pay this fee outright, you’ll have to loop it in with your auto loan, raising your total monthly payment.

Perk #3: Saving More Money for the Future

The current supply and demand issues are putting such a strain on both the auto industry and consumers, that it may be wise to wait until market conditions adjust and improve. What can you do in the meantime? Save, save, save. 

If you’re still paying off another car, take care of that loan first before jumping into another one (and explore refinancing solutions for lower payments – more on that below). If you have no current car payment or are about to pay off your loan, congratulations! Enjoy the boost in your bank account for a little while before jumping into another financial commitment.

The upside is that the more money you save, the more you’ll be able to put down when you do buy a new car. That translates to lower monthly payments, less stress on your budget, and less anxiety in making ends meet.

Auto Refinancing Options in Reading PA

You should only be spending 15% of your monthly take-home income on car expenses. That includes gas, upkeep, and insurance. If buying a new car will take you over this limit, reconsider opting for a new car in an already-challenging market. 

If you’re spending more than 15% now – or simply don’t love your car payment – Discovery FCU has the best auto refinancing options in Berks County. Check out our current rates, plus we’re offering a 1% cash back refinance special, up to $500 cash back, and no payments for 90 days. 

So, not only can you save money by not taking on a new car with all its obligations you can save by lowering your monthly payment. Then, if you choose, you can set aside even more money for your future brand new ride. Check out all the perks of refinancing with Discovery FCU here.

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