Used CDJR dealerships and private sellers alike are scrambling due to the state of the market for used trucks, which has seen an inflation of prices and lower inventories due to the shortages caused by the pandemic. Semiconductors are the bottleneck in the production of new trucks—as well as all other vehicles in the market—and the havoc in the manufacturing of new trucks has trickled down to the demand for used trucks. You may be looking for a used Ram 1500, so you can tow a trailer, but competition for used trucks has driven the price up so much that normal depreciation value isn’t reflected in the market at this time. If you really need to replace your truck and expect to buy a used model right now, you should learn how to negotiate the state of the Canadian market first.
Where Are All the Used Cars?
At this time, about 300,000 used cars are being sent to the US over the course of the year because the demand there is so high, and the Canadian dollar value allows for exporters to purchase vehicles at full price and still make money in the US market. Trucks tend to be high sellers because demand continues to grow for trucks each year, with more and more buyers choosing trucks as daily drivers, even if they don’t need the truck for utility purposes. This higher demand for trucks was already driving the market toward an increase in production; now that production has been lessened from shut-downs and shortages of necessary materials, buyers are finding options are limited, especially in the used market. So, the already smaller number of available vehicles is being undercut by the US market siphoning away from the Canadian market. But buyers still have options.
Choosing the Best Model Year
Before you start shopping, the high demand for used trucks means preparation is key when you want to find a particular brand of truck, especially if you want a specific model year. Every manufacturer has model years in which vehicles are tracked as having fewer mechanical problems, and in the case of Ram trucks, the model year 2018 is rated as one of the best. If you intend to shop for a used Ram truck, consider searching for this model year so you know you’re getting the best chance of owning a truck that will have fewer problems. Used truck warranties won’t cover costs of repairs after they run out, so saving on maintenance with a more reliable model year will offset current high prices in the long run. With that in mind, make a list of features you absolutely must have, and then search for the trim level which includes those features to give yourself a target while you scour dealership inventories.
How to Navigate the Used Truck Market in 2022
Being prepared to snap up a truck that has the features you want takes a few important steps to guide you toward a successful purchase. Take these measures, and you are likely to have an easier time finding and being able to purchase the truck you want.
- Set a Realistic Budget: Before you start shopping, know your monthly budget for payments and then translate that monthly budget into the overall price you can afford. Be realistic about including all the fees which will be added to the price, so you budget appropriately, and then stick to the price when you start to shop. Don’t give in to pressure from a dealership or be swayed by a truck that’s too expensive.
- Prepare to be Flexible: As you shop, you are likely to find that with a smaller number of available trucks to buy, you may not be able to get the colour you prefer, the interior upholstery you like, or even certain features you want. It’s good to be flexible, so you don’t miss an opportunity to buy a truck with the right specs in the model year you know is best. Be clear on the features you must have, and then those you can live without, like colour choices.
- Exercise Patience: You may get lucky the first time you search, but odds are you may have to shop for a while before you find the right truck. It helps to be consistent about shopping, especially if you plan to use online searches to scout for deals. Make it a habit to check daily, and you may even want to ask dealerships what time of day they update their inventory so you can be online as soon as the new trucks go up on the website.
- Haggle for Financing: Take time to locate the best loan interest rates you can get for your credit rating, and don’t be afraid to haggle with the lender about the rates. You can negotiate several aspects of the loan, such as the length of the loan, the penalty for paying it off early, and the annual percentage rate. Because prices for used trucks are high right now, saving money on the loan is where you keep your budget lower.
- Get Pre-Approved for Financing: Rather than shopping for a truck and then seeking a lender, know your budget and get pre-approved before the purchase. That will mean you are assured of funding, so you can jump on a sale as soon as you find the right truck. In this market, you can’t afford to wait when you find the right vehicle.
- Negotiate Out-the-Door Pricing: Once you find the right truck and enter into negotiations with a dealer, be ready to negotiate for the overall price that includes all fees. Rather than haggling about single items like the cost of fees or add-ons to get the price right on a truck, ask the dealer to give you the out-the-door price. The out-the-door price includes every fee and all taxes so you know you’re sticking to the overall price range you can afford.
- Use Your Trade-In As a Bargaining Chip: If you have a vehicle to trade-in, take the time to find out what it’s worth before you put it toward the cost of the truck you want to buy. Because so many dealerships are looking for inventory, you have a valuable resource to use in the bargain, especially if it’s in good condition.
Buyer Tips and Tricks
With the market fluctuating so much for both new and used vehicles, it can be difficult to predict what the near future will bring. Be cognizant of the fact that the availability of used vehicles is down about a third of what it was last year, so competition is stiff. Dealerships are unlikely to be willing to lower prices for vehicles right now, so if you want to save money on pricing, you will need to wait until a sale offers a percentage off the price or consider waiting until more new vehicles are produced, so the market pricing relaxes.
What you don’t want to do is buy a truck at a vastly inflated price, only to be stuck holding a loan that puts you underwater—which means your loan is higher than the worth of the vehicle. That can happen once enough new vehicles are manufactured to meet current demand. Inflated prices today will not continue to stay so high once the demand is met, so be wary of paying too much for a truck in these tough times. As of the writing of this piece, the projection is that later in 2022, pricing for vehicles should return to more normal ranges according to what they were before the shortages and shut-downs affected vehicle availability.
Not everyone can wait until pricing is lower, but you do have options if you need to buy now. Remember while you shop that dealerships want to sell, and they are scrambling just like buyers in order to manage the market. Try to be considerate about the situation while you negotiate, and let the dealership know you understand they are probably very busy trying to locate enough vehicles to provide for their customers. Your patience and thoughtfulness may pay off in the end.