(May 27, 2022) SANTA MONICA, Calif. — Consumers looking to purchase a vehicle this Memorial Day weekend need to plan ahead and shake up their shopping habits to maximize savings, according to the car shopping experts at Edmunds. Edmunds analysts note that a growing number of consumers are being forced into the used car market compared to years past as a result of supply constraints and elevated prices for new vehicles.

Edmunds data reveals that in April 45% of consumers who made a car purchase with a trade-in bought a used vehicle, compared to 35% in April of 2021 and 38% in April of 2020.

"Memorial Day weekend 2022 is not going to present as many discounts or incentives for car shoppers as years past, so consumers need to set their expectations accordingly," said Ivan Drury, Edmunds' senior manager of insights. "And regardless of preferences or even budget, most car shoppers should be prepared to buy used this summer holiday weekend since they might not find many new options available."

Edmunds analysts caution that the used market doesn't offer the same widespread savings for car shoppers as it had in previous years due to limited inventory in the new car market creating increased demand for used vehicles:

    •    Edmunds data reveals that the average transaction price (ATP) for used vehicles was $29,948, which was less than the average of $45,051 for new vehicles in April,  but still represented a 22% year-over-year increase from the ATP of $24,549 for used vehicles in April 2021.

    •    Edmunds experts also note that interest rates for financed used vehicle purchases tend to be much higher than for new. Edmunds data shows that the average annual percentage rate (APR) for financed used purchases in April was 8% compared to 4.7% for new purchases.

To help guide shoppers ahead of the holiday weekend, Edmunds analysts have created a table demonstrating how much additional money consumers can expect to pay over the course of a 72-month car loan for $30,000 at different interest rates. They have also put together a list of used vehicles that commanded the lowest average annual percentage rates (APRs) in May 2022. Edmunds analysts note that consumers may find that the used vehicles with the lowest average APRs are certified pre-owned (CPO) specials being offered by auto manufacturers.





"If you're a habitual new-car buyer, certified pre-owned inventory might be a good place to look in today's tight new vehicle market," said Drury. "With CPOs, you'll likely receive subvented interest rate offers, together with ‘peace of mind' warranties. Plus, unlike five to 10 years ago, today's CPOs are likely to have many of the creature comforts you'd look for in the new car market, like Apple CarPlay and backup cameras."

Regardless of what consumers are looking for, Edmunds experts advise taking these critical money-saving steps this holiday weekend:

    1    Know your trade-in value. Appraise your current vehicle on sites like Edmunds before you start shopping because the extra equity from a trade-in is your biggest negotiating tool in today's market.

   2    Know your pre-approved interest rate. Even if you have excellent credit, it's good to get pre-approved for a car loan and know what interest rates you qualify for to determine how much you can actually afford — and see if a dealership will match or beat your APR. For tips on purchasing a vehicle when interest rates are high, click here.
   
  3   Know your overall budget. With prices and interest rates where they are, you might not be able to afford as much car as you think. Think beyond the monthly payments. Other vehicle costs to consider besides financing terms include car depreciation, insurance, taxes and fees, fuel, maintenance and repairs.

  4   Know when to make a move. Vehicles are flying off dealer lots; act fast when you find a car that suits your needs instead of waiting for the holiday weekend.

"Consumers in need of a new ride this summer need to retrain their car shopping mental muscles and break old habits to smartly navigate today's market, where traditional summer holiday car shopping rules no longer apply," said Drury. "You can't simply walk into the dealership on Memorial Day expecting to find bargains or incentives or even the vehicle you want to purchase. Doing the legwork beforehand could save you up to thousands of dollars, especially if you're financing a purchase or handling a trade-in."

For an infographic showcasing the average auto loan rates by state, click here