Should You Buy a New Car in 2024?

If you've spent the past few years waiting and hoping to buy a new car, 2024 may finally be the time. In an interview with the Detroit Free Press, Cox Automotive Chief Economist Jonathan Smoke said that this year will be the best year for consumers to purchase a new car since 2019.

"With supply normalizing and the economy stabilizing to hit a soft landing and not turn into a recession, it leads to an environment that is the most normal we've encountered since 2019," Smoke said.

However, you're going to want to be strategic about buying a new car. Here's what we mean.

Get your financial ducks in a row

Unless you're paying cash for a car, you'll likely seek an auto loan. The most important thing you can do before shopping for a loan of any kind is to order copies of your credit report. Currently, AnnualCreditReport.com offers free online credit reports weekly from all three of the major credit reporting agencies -- Equifax, Experian, and TransUnion.

The process is instantaneous, meaning you won't have to wait around for a copy of your credit report(s) to be mailed to you.

What to do with your credit reports

Once you have your reports in front of you, go over each of them line by line. You're looking for any mistakes. For example, if a report shows that you still have a balance on a credit card you paid off months ago, note it. No matter how small the mistake, you want to record it. That's because even the smallest mistakes can lower your overall credit score, and it's that credit score that determines (in part) the interest rate you'll pay on the loan.

If you find any errors, report them to the credit bureau in question (you can do it online). For example, if you find a mistake or two in your Equifax report, report it to Equifax. According to the Consumer Financial Protection Bureau (CFPB), a credit reporting agency must investigate your dispute within 30 days of receiving it and must notify you of its findings five business days after completing an investigation.

If it's clear that your credit is a mess, you may want to spend 2024 getting it cleaned up. The goal is always to get the lowest interest rate and best terms available -- but you need a healthy credit score to do that.

Make sure your budget can take the hit

Take a look at your monthly budget. Do you have the wiggle room you need to take on a new car payment, or will it deplete your checking account?

In addition to the car payment, you'll want to factor in vehicle-related expenses like auto insurance, routine maintenance, repairs, and gasoline. The last thing you want to do is run your account so low that you don't have enough money to cover an unexpected emergency.

Speaking of insurance, consider how much a policy will cost you. Generally, the more expensive the car, the more expensive it is to insure it properly. Unless you have room for a hefty auto insurance premium, you may want to consider a less expensive vehicle.

If you haven't yet, take enough time to build up an emergency savings account so you don't have to lose sleep if things go south and you need extra cash. If you're unsure how much you should have in an emergency fund, this calculator can help you figure it out.

Check inventory before shopping

When it comes to buying a vehicle, supply and demand is king. The primary reason auto prices were so high during the pandemic was low inventory. Simply put, there were more potential car buyers than well-priced cars on the market.

Before shopping for a car at a specific dealership, check out how many cars the dealership has on the lot. If it looks a little sparse, you may want to move on to another dealership.

Take advantage of money-saving promotions

The interest rates may sting a bit right now, but auto manufacturers are making up for it by offering financing deals of their own. Here's a sample of what's out there right now.

0% financing

• 2023 Ford Explorer
• 2024 Mitsubishi Outlander
• 2023 Nissan Ariya
• 2023 Nissan Titan XD

1.9% financing

• 2023 Ford F-150
• 2024 Mustang
• 2023 Chevrolet Traverse
• 2024 Audi Q4 e-tron
• 2024 Subaru Outback

2.4% financing

• 2023 Silverado 2500HD

2.9% financing

• 2024 Ford Expedition
• 2024 Ford Escape
• 2024 BMW i5
• 2024 BMW i7
• 2023 Subaru Ascent

3.9% financing

• 2024 Cadillac CT4
• 2024 Cadillac CT5
• 2024 Cadillac XT5
• 2024 Cadillac XT6
• 2024 BMW i4
• 2024 BMW 8-Series
• 2024 BMW 7-Series

Again, this is just a small sample of February 2024 promotions. When you're ready to look at cars, search online for the best promotions. While you're at it, an online search will also give you an idea of how much you can expect to pay for insurance and routine maintenance.

2024 looks like it will be a decent year to purchase a vehicle, but only if you find one that fits both your needs and your budget.