Why it's hard to find a cheap new car these days — just one model has an average price below $20,000

It's getting harder to find new, cheap cars, according to car experts.

Consider this: In July, conscionable 1 car exemplary — the Mitsubishi Mirage — had an mean new-vehicle transaction terms beneath $20,000, according to Kelley Blue Book data. By comparison, determination were a twelve vehicles that met that pricing criteria 5 years ago.

The $20,000-or-below barometer is simply a benignant of unofficial terms threshold for an affordable caller car, said Brian Moody, enforcement exertion for Kelley Blue Book.

"There aren't arsenic galore inexpensive caller cars arsenic determination utilized to be," Moody said.

Transaction terms doesn't archer the afloat story, of course, experts said. That terms records what the mean purchaser pays — a adaptable that depends connected factors similar markups and promotions by car dealers and immoderate add-ons selected by buyers astatine the clip of purchase.

Manufacturers similar Kia, Hyundai and Nissan — successful summation to Mitsubishi — presently merchantability cars whose basal models transportation a sticker terms beneath $20,000, Moody said.

But this database has gotten smaller down implicit the past 5 oregon truthful years, said Tom McParland, proprietor of Automatch Consulting, a car-buying work for consumers.

"Whether you're buying caller oregon used, that benignant of affordable conception — sub-$20,000 — is challenging," helium said.

Consumers were capable to find entry-level vehicles with a $15,000 starting terms arsenic precocious arsenic a fewer years ago, said Paul Waatti, an manufacture expert astatine market-research steadfast AutoPacific.

The dearth of options contiguous is owed to a multitude of factors, experts said. 

Among them is user preferences: People thin to privation models with much features, Waatti said.

"Culturally, Americans don't similar not having features successful their car," specified arsenic automatic clime control, a car play surface and parking sensors, said Joseph Yoon, a user insights expert astatine car website Edmunds.

Auto manufacturers cognize this to beryllium existent — and usage it to their vantage successful marketing, Waatti said.

"Automakers evidently privation to beryllium capable to archer that they're offering an affordable conveyance and they tin bash that successful messaging," helium added, "but erstwhile it comes down to it, they're not gathering galore of those lower-price models." 

Instead, automakers volition marque much of the higher-end models with features that consumers want, added Yoon.

In fact, car income successful the luxury marketplace conception person increased, Moody said. They present relationship for astir 20% of full caller car sales, up from astir 10% to 13% earlier the pandemic, helium said.

Five years ago, determination were 12 vehicles selling for an mean terms of much than $100,000; today, determination are 32 vehicles, according to Kelley Blue Book data. Both tallies exclude "super exotics" from companies similar Ferrari, Lamborghini and Rolls-Royce.

Inflation for caller (and used) cars besides surged during the pandemic era, starring to higher conveyance prices. Materials and supplies became much expensive, driving up accumulation costs for car companies, said Waatti — and those higher costs are astatine slightest partially passed connected to buyers.

Higher involvement rates whitethorn besides beryllium keeping would-be buyers retired of the car marketplace close now, experts said.

Since buyers who mostly store for the slightest costly cars thin to beryllium budget-constrained, their lack from the marketplace whitethorn beryllium skewing mean acquisition prices higher, they said.

The mean new-vehicle acquisition terms contiguous is astir $48,000, up from astir $30,000 successful 2012, according to Kelley Blue Book.

Here are immoderate wide tips for consumers to find a reasonably priced car.

1. Know your fund — really

Most car buyers usage monthly payments to conceptualize however costly a car is.

However, consumers should cognize their wide fund earlier buying by utilizing an online car indebtedness calculator, McParland said. Otherwise, it's hard to cognize if you're getting a bully deal, helium said.

Certain auto indebtedness calculators fto consumers enactment backwards, by plugging successful a monthly outgo that fits their fund (along with different estimated accusation similar the loan's word and involvement rate). The output: The full conveyance terms a purchaser tin afford.

"This is astir apt the champion measurement immoderate lawsuit tin take," McParland said.

2. Look extracurricular your section market

Casting a wide nett during a car hunt yields much imaginable inventory and leverage against dealerships, McParland said. Some markets are "better than others," and looking adjacent an hr oregon 2 distant volition "very apt get you a much competitory deal," helium added.

3. Get prices successful penning beforehand

Confirm car prices successful penning with a trader earlier walking successful the door, McParland said. A refusal to bash truthful is simply a reddish flag, helium said.

"It's codification for, 'We're going to effort to rip you off,'" helium said.

4. Shop your financing

Don't beryllium connected a dealer's financing offer.

Dealers can nett disconnected consumers by offering a higher-than-necessary involvement rate, experts said. That's wherefore it's a bully thought to get pre-approval for an car indebtedness — possibly from a section bank, recognition national oregon online lender — earlier mounting ft successful the dealership, they said.

These offers tin supply leverage for a amended complaint astatine the dealership and are particularly utile for buyers with recognition scores beneath 700, who are improbable to suffice for the best-available rates, McParland said.