Forget getting a deal; these days, anyone in the market for a new car could pay thousands over the sticker price before even driving off the lot.
Limited inventory due to persistent shortages of computer chips, along with other supply chain challenges, helped push new car prices up 10 percent from a year ago, according to the latest data from the US Bureau of Labor Statistics.
For new cars, the average transaction price reached about $46,259 in August, the highest on record, according to a separate forecast from JD Power/LMC.
And now, as demand continues to outstrip supply, dealers are even charging a premium over the manufacturer’s suggested retail price for new vehicles, according to car shopping site iSeeCars.
“Consumers are willing to pay well above the sticker price for new cars because inventory is so tight and because they know new car prices aren’t expected to improve until 2023 at the earliest,” said Karl Brauer, executive analyst at iSeeCars.
Some cars are marked up to 24%
New Jeeps on display at a New York City car dealership on October 5, 2021.
Spencer Platt | Getty Images
“The market is pretty brutal in terms of pricing,” Brauer said.
The average new vehicle price is 10% above sticker price, according to iSeeCars’ recent analysis of 1.9 million new car listings found, with some sought-after models marked up much more.
The vehicle with the biggest profit was the Jeep Wrangler, which currently sells for 24 percent over MSRP, or about $8,433 more than retail, iSeeCars found.
Several in-demand luxury SUVs are also at least 20% off the sticker, including the Porsche Macan, Genesis GV70 and Lexus RX.
“These are vehicles that people buy because they want to have fun on the weekends and are less affected by price increases,” Brauer said.
However, “if you’re in a position where you need a car to meet your basic needs,” Brauer advises car buyers to “research and compare prices between multiple dealerships,” even if they’re far away, “and in some cases, [shoppers] you can avoid brands by ordering directly from the manufacturer.”
Auto loan costs are also higher
At the same time, financing any type of vehicle is also becoming more expensive as the Federal Reserve’s rate hike cycle increases the cost of auto loans.
The average annual percentage rate for a new car hit 5.7% in August, according to the latest Edmunds data, and is likely to rise.
More from Personal Finance:
How much inflation can affect your tax bracket
5 ways to save amid record food price inflation
Here’s what to expect from both new and used car prices
Paying a 6 percent annual percentage rate instead of 5 percent would cost consumers $1,348 more in interest over the course of a $40,000 72-month car loan, Edmunds experts said, although the Consumers with higher credit scores can often get better loan terms. .
“Shopping around for better rates through financial institutions can be helpful, but low-interest or no-interest loans through the automaker’s captive finance company can also make a difference in saving money and, ultimately, they can lead to the decision to buy one more vehicle. another,” said Ivan Drury, chief information officer at Edmunds.
Subscribe to CNBC on YouTube.
