Buying a new vehicle is a major investment, and the cost of new vehicles has soared in recent years. According to Kelley Blue Book, the average price of a new car reached a record $50,326 in December 2025, making any potential savings on a vehicle purchase even more valuable.

Costco may be known for offering great deals on groceries, appliances and other items, but the Costco Auto Program could help you save on a new or pre-owned vehicle purchase or lease. While the program provides a more streamlined buying experience, it doesn't always guarantee the lowest possible price.

The program offers several additional perks for members, from discounts on parts and service to discounts on RVs. Taking a closer look at how the program works and what these benefits include can help you decide whether it's a good fit for your next vehicle purchase.

What is the Costco Auto Program?

Costco doesn't sell vehicles directly. Instead, it connects members with a network of participating dealerships that offer prearranged pricing. The Costco Auto Program, which has been around since 1989, is free to use with an active Costco membership.

Through the program, members can shop for new vehicles, electric vehicles and certified pre-owned models, all with pricing negotiated in advance through participating dealers.

How the Costco Auto Program works

Once you decide to use the program, the process is fairly straightforward:

• Visit the Costco Auto Program website. To get started, you’ll search the auto program website for the type of vehicle you want to buy or lease. You'll enter your zip code and pick out the vehicle you want.
• Get connected with an approved dealership. After selecting your car, you'll enter your contact information and Costco member number. From there, Costco will connect you with an authorized dealer. That dealer will contact you to make an appointment.
• Review price information. During your appointment, you'll receive prearranged Costco member pricing on the vehicle.
• Complete your purchase. You can choose to complete the purchase or lease, or you can decide not to buy the vehicle after seeing the prearranged price.

Costco vets and trains participating dealerships, with a focus on customer service, to help ensure a more consistent and lower-pressure buying experience. However, Costco doesn't sell vehicles or negotiate individual transactions. You'll complete the purchase directly with the dealership.

Pricing is negotiated in advance between Costco and participating dealers, but it isn’t displayed online. Instead, you'll need to visit or connect with the dealer to receive your prearranged Costco member price and decide whether to move forward with the purchase.

Dealerships pay a fee to participate in the program, which helps support and maintain the service.

How much money can you save?

The amount you can save through the Costco Auto Program varies based on the vehicle model, demand and your location. Some estimates suggest average savings of around $1,000 on a new vehicle purchase, though actual discounts can be higher or lower depending on market conditions.

In some cases, limited-time manufacturer incentives can increase your savings when combined with Costco’s prearranged pricing. For example, the current promotion offers eligible Costco members up to $1,250 on a new Chevrolet Traverse for Executive Members ($1,000 for non-Executive Members), plus any additional incentives they qualified for.

These types of promotions can increase the overall value of the program, especially if you're flexible on timing your purchase.

Additional perks beyond vehicle pricing

The Costco Auto Program also includes perks beyond vehicle pricing that can add ongoing value. Member-only incentives and limited-time promotions can be stacked on top of the prearranged Costco price, potentially increasing your total savings at the time of purchase or lease.

In addition, members receive 15% off parts, service and accessories at participating service centers. Savings are capped at $500 per visit, but these discounts can help reduce maintenance and ownership costs over time, especially for routine services or larger repairs.

Pros of using the Costco Auto Program

Here are a few reasons to consider using the Costco Auto Program:

• Simple purchase process: With the program, you can get a prearranged price on your vehicle. There's no haggling required, and the purchase is simple and straightforward.
• Access to vetted dealerships: Costco has vetted dealerships for customer service, which can give you peace of mind as you shop.
• Predictable pricing: Costco's prearranged pricing is predictable. It typically won't exceed the vehicle's MSRP and may help you save compared to what you would pay at another dealership.
• Reduced sales pressure: Compared to traditional dealerships, the Costco Auto Program offers a lower-pressure buying or leasing experience.

Cons and limitations buyers should know

While there's a lot to like about the Costco Auto Program, it does come with some drawbacks:

• Must use participating dealers: If you want to use the program, then you must buy a vehicle through a participating dealer. That might mean you could miss out on decent deals offered by dealers that don't participate in the program.
• Pricing isn't quoted remotely: In most cases, the preauthorized pricing isn't quoted remotely, and you'll need to make an appointment with a dealer to access that pricing.
• Negotiators could find better deals elsewhere: If you're a skilled negotiator, you might be able to find a better deal on that same vehicle by using a traditional approach and negotiating a vehicle price down, especially if you have an older vehicle to trade in.
• You might face add-ons or extras: Dealers in the Costco program might still offer add-ons or extras. These options can quickly increase your preauthorized price.
• Costco membership required: To use the Costco Auto Program, you’ll need an active Costco membership.

Who the Costco Auto Program works best for

The Costco Auto Program tends to work best for buyers who value simplicity and a more predictable experience. If you dislike negotiating, the prearranged pricing can take much of the stress out of the process.

First-time car buyers may also appreciate the straightforward, guided approach, while busy shoppers can benefit from being able to start the process online and complete a more streamlined transaction at the dealership.

The program can be especially useful for high-demand vehicles, where discounts below MSRP are harder to find. In those cases, even a modest prearranged discount or added incentive can provide value.

That said, the program may not be the best fit for every buyer. If your top priority is getting the lowest possible price and you are willing to visit multiple dealerships, negotiate or use competing offers as leverage, you may be able to find a better deal on your own.

Tips to get the most value from the Costco Auto Program

You can get the most value from the Costco Auto Program if you're willing to do a little extra research:

• Compare Costco pricing with outside quotes: In some cases, you might find the best pricing through the Costco program, but that won't necessarily always be the case. Do some comparison shopping and see if you could save more on the same vehicle at a dealership outside of the program.
• Stack manufacturer rebates and financing incentives: Research available manufacturer rebates and financing incentives. You can stack these on top of the Costco pricing for additional savings.
• Research dealer add-ons: Dealer add-ons, like extended warranties and paint and fabric protection, may seem like a good investment in your vehicle, but they can quickly increase the price. Research these add-ons to determine which are really worth the investment for your situation.
• Verify inventory availability: Before you visit a participating Costco dealership, verify that the vehicle(s) you're interested in are available. Doing so can ensure that you'll be able to test drive the vehicles and complete a purchase if you decide to do so.

Is Costco's Auto Program worth it?

The Costco Auto Program offers convenience and predictable pricing, but it doesn’t guarantee the lowest possible deal in every situation. If you're in the market for a new car, consider how much you value a simpler buying experience versus the potential savings of negotiating on your own.

It can be worth comparing the Costco price with quotes from other dealerships, as well as factoring in available incentives and your willingness to negotiate. Weighing these trade-offs can help you decide whether the program is the right fit for your budget and buying style.

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If you have a car, you're probably getting flooded with calls, emails and letters telling you that your car needs an extended warranty. A lot of these are scams, but extended warranties themselves are real and sometimes useful.

While you might be reluctant to pay the added cost, some of these sales materials can make it sound pretty scary to drive without one. But, if you don't check the fine print or choose a reputable warranty underwriter, you could end up paying for coverage that doesn't quite live up to your expectations.

How do extended warranties work? Do you really need one? What should you consider if you are going to buy one? Get the details you need to know below.

How do extended warranties work with new cars?

When buying a new car, you might be offered an "extended" or "wrap-around" warranty. Whether it's worth it depends on what the standard warranty already included with your new car covers.

This varies by make and model, but typically a standard warranty lasts about three to five years or 36,000 to 60,000 miles. In terms of what they do, there are a few things to understand before signing:

• Normal wear and tear is never covered. All warranties only cover defects or damage that aren't considered normal wear and tear. So, something like worn-out brake pads will be on you to replace.
• Covered components: Some warranties might be "comprehensive" or "bumper-to-bumper," meaning all parts and systems are covered. Others might apply to specific systems like the powertrain, infotainment system or battery.
• Owner responsibilities: Often, warranties come with the condition that you keep up with routine maintenance like oil changes and tune-ups. If you fall behind, the warranty could be voided.
• Exclusions: Even if a certain system is included, some specific components of it might be excluded, or there might be certain situations in which they'll be excluded. Read through these exclusions carefully.
• Upgrades can lead to denied claims. If you take it to a shop after the fact to modify it in any way, dealerships may claim the upgrade caused the defect and deny your claim. Something as simple as swapping the tires or installing a hardwired dash cam may be enough to cause problems
• "Abnormal use" won't be covered. Even if you have a car made for off-roading, your warranty may not cover damage that happens if you actually take it off-road. In some cases, doing anything more than normal street driving could void the entire warranty.

An extended warranty, meanwhile, would work the same as your standard. The difference is it either includes things that are excluded from your standard warranty or that it extends the time that your vehicle is covered.

How do extended warranties work with used cars?

Unlike a new car, buying a used car usually doesn't come with a warranty. One exception to that is a certified pre-owned car, which is certified by the dealer to meet certain standards and will sometimes come with an extended warranty to back that up.

For the most part, used car warranties work the same way. But there are a couple of unique features that you might find:

• Waiting periods. Sometimes, used car warranties won't kick in right away. Instead, they take effect 30 to 90 days after purchase. The waiting period might instead be a mileage, like 1,000 miles.
• Preexisting conditions. Any issue that existed before the warranty was purchased is often excluded. If you bought the warranty when you bought the car, it can be hard to appeal a claim that's denied as a preexisting condition.

Is it worth it to get an extended warranty on a car?

The answer depends on your risk tolerance. When buying a new car, you already have a standard warranty included in the price, so you can at least wait until that one is near its expiration to explore your options.

For used cars, the answer is trickier because it depends on the condition and maintenance history of the car you bought. For a certified pre-owned car that came with an extended warranty, go ahead and use the warranty if you can.

If trying to get a claim approved turns out to be a huge headache, it might not be worth the money to buy another extended warranty when that one expires.

Reasons to not buy an extended warranty

Some reasons you might opt not to get the extended warranty include:

• You had bad experiences trying to get repairs covered under the original warranty that came with your car.
• You've made modifications to your car that would either void a warranty or render it pretty much useless.
• You've done the routine maintenance on the car yourself, so you don't have official records documenting its maintenance history.
• You do a lot of off-roading, hauling or other things with your car that a warranty underwriter could deem "abnormal."
• You'd just prefer to handle repairs without the stress of a claims process.

Extended warranty vs emergency fund

Depending on whether the car is used or new, an extended warranty can range from about $1,000 to $3,000 for a coverage period lasting three to five years (or a certain mileage).

Would you be better off forking over that cash for a warranty or stashing it in a savings account to pay for repairs as needed over that time frame?

The good news is you aren't stuck with one decision or the other. As mentioned, you can hold off on deciding about that extended warranty until your existing warranty is about to expire.

While you're waiting, go ahead and keep the cash you'd spend on it in a savings account so it can earn interest while you weigh your options.

Mistakes to avoid when buying an extended car warranty

If you would feel more comfortable having that extended warranty, there are some important steps to take to make sure you're getting a fair price and paying for a warranty that is actually usable.

Here are some of the biggest mistakes car buyers make when buying extended warranties:

• Forgetting to negotiate the price. The price you're offered isn't set in stone. Start by offering to pay half (or even less) than the price you're initially quoted and negotiate from there.
• Not vetting the company. You'll get plenty of ads, phone calls and emails offering you an extended car warranty. But they aren't all created equal. You need to buy one from a reputable source, like your car's manufacturer, a local bank or an auto club like AAA.
• Getting pressured into buying an extended warranty right away. At the dealership, the salesman might put a lot of pressure on you to add that warranty right then. Just take your car home, do some research, and compare prices and options from multiple reputable companies. Your dealer's offer might be the best one, but you might end up scoring a better deal elsewhere.

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Considering buying a new car in retirement? Even with a 25% tariff on many vehicles, and despite General Motors' pledge not to raise prices on its new cars, you might still be wondering if it's the right move.

While avoiding price hikes is never a reason to purchase a big-ticket item, if you are in the market for a new car, how you purchase it will make a big difference in the overall cost of your new ride.

After all, retirees have two options when buying a new car: finance it or buy it outright.

Financing it means taking out a loan from a bank or lender and paying interest over the life of the loan. Buying it means drawing down from your retirement savings, either from a tax-advantaged or non-tax-advantaged savings account.

Which option makes the most sense requires some back-of-the-envelope calculations and in-dealership negotiations, says Denny Artache, president and CEO of Artache Financial Group.

While some financial gurus bemoan the idea of buying a new car because it loses about 10% of its value as soon as you drive it off the lot, if you can get a deal, that argument goes out the window, Artache says.

Plus, buying new gives you peace of mind. With a new vehicle, you are less likely to have the car break down and cost you money for the next five to seven years, beyond the normal maintenance.

“Every time you buy a car below MSRP and are buying something at a 20% discount, you are ahead of the game,” says Artache. “You have to be smart about the rates.”

The case for financing your new car

Financing a new car makes sense when you have a really good credit score and get a deal such as 0% interest for 60 months. Alternately, financing makes sense when the interest rate is low enough that it is cheaper than taking the money out of your retirement savings and paying taxes on the withdrawal.

Let's say you want to purchase a new car for $40,000 at an APR of 2% for five years. You would pay $2,066.63 in interest. At 3% your interest would be $3124.86. (The calculation does not include state and sales tax, title, registration and other fees.)

If you took out $40,000 from your 401(k) and you are in the 12% income tax bracket, you would pay $4,800 in taxes, plus that money would lose the compounding effect of staying invested in your 401(k). If you are in a higher tax bracket, the hit will be even more.

When it doesn't make sense to finance

If you have a low credit score, will pay a high interest rate on your car loan, and are in the 12% tax bracket, then financing may not be the best option. Take that $40,000 car loan over five years, but at an APR of 5%. You would end up paying interest of $5290.96, excluding sales and state taxes and title, registration and other fees. At 7% that goes to $7522.88.

The tax on withdrawing $40,000 from your 401(k) in the 12% tax bracket would be way less at $4,800. If you have a Roth 401(k), the withdrawals are tax-free, but you will lose the compounding effect if you take a drawdown.

When it doesn’t make sense to buy a new car

While buying a new car will give you that peace of mind, it doesn’t make sense to spend money you don’t have, especially if you are on a fixed income.

If you can’t afford a new car, Atache says to consider purchasing a used one. Instead of spending $40,000, buy one for $20,000 and hire a trusted mechanic for $500 to ensure the car will last for 50,000 to 100,000 miles without breaking down.

After all, you may not drive as much as you did when you were younger and won’t put as much wear and tear on your vehicle.

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To help you understand what is going on in the economy and beyond, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we publish many (but not all) of our forecasts a few days afterward online. Here’s the latest...

The car market is getting back to normal. Slowly. Sales are rebounding. Inventories are no longer abnormally scant. Financial incentives, which dried up during the pandemic, are reemerging. Still, it’s a tough environment for buyers. Here’s what to know if you might be in the market.

1. Sales and costs
Total sales should grow a bit this year: Figure on about 16.3 million, up slightly from 2024’s already-solid 15.9 million vehicles sold. Interest rates on car loans should decline, albeit only slightly, after the Federal Reserve’s cuts last year and a bit more Fed easing later this year. Slightly lower financing costs also bode well for sales.

2. Inventories
Buyers can expect a bit more selection as dealer inventories rebound — also good for sales. Among the most popular categories of cars this year, according to Joseph Yoon, consumer insights analyst at Edmunds.com:

• Big and compact SUVs. Roomy three-rows and, on the other end of the spectrum, small ones. Families with kids are often looking to upsize. Retirees and empty nesters often want to downsize.
• Pickup trucks of all flavors. Nothing new, considering how dominant trucks once meant for work have become in recent years.
• And hybrids, which had a banner year in 2024 and figure to stay in demand. “Consumers have made it pretty clear” that they’re interested in electrification, but not necessarily pure electric vehicles, notes Yoon. Hybrids like Toyota’s RAV4 and Honda’s CR-V are thriving as buyers look to save gas but not abandon it. More hybrid versions of popular models are rolling out, particularly from Toyota — hybrid Tacomas, Tundras, 4Runners, etc.

If you’re looking to score a big discount, EVs are the place to shop, Yoon says, provided that you are open to going electric. Between federal and state tax credits and discounts from manufacturers, there are juicy deals to be had. Note that any talk of doing away with the $7,500 tax credit on certain EV models could spur a huge wave of buying.

Brands with the most inventory in stock now, according to data from Cox Automotive, which could help buyers: Ford, Tesla and Stellantis-owned ones like Ram and Jeep. By contrast, inventories are tight at Toyota, Lexus, Honda and BMW, with scant room to haggle.

3. Buying advice
Some general buying advice, especially for folks who haven’t shopped lately:

• Be prepared for sticker shock, both on the prices of new cars and the rates on auto loans, says Yoon of Edmunds. The pre-COVID days when salespeople were ready to negotiate and loans could be had with 0% interest are long gone. Assess your buying power accordingly.
• Be flexible about what you want vs what you need. If you set your heart on one particular model or trim level, it could be hard to find, or cost a pretty penny.
• Lay the groundwork before you walk into a dealership. Identifying the car you’re interested in and contacting the dealer before you go in to see or drive it can help expedite the purchase. Otherwise, you’ll be competing with lots of buyers.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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One of the reasons why Americans are holding onto their older cars is because of the high prices new cars bring. Kelley Blue Book reported the average car buyer spent $49,740 on a new vehicle in November of 2024. That's only $218 short of the record for the average price set in December of 2022.

So, why are prices so high for vehicles? In 2022, there was a limited supply driving up costs. However, that isn't the case in 2024. One of the reasons why the average car price is so high is because more car owners are preferring luxury brands, with higher price tags. Sales of vehicles $80,000 and over increased 37% compared to December of 2023.

Want to buy a new car? There are mixed signs on the horizon

Despite the trend of aging cars, there is evidence that new car prices are getting somewhat more affordable.

Buick and Volkswagen had their average year-over-year sale prices fall by 7% and 6% respectively. And Mitsubishi's average sale price dropped by 12%, according to Kelley Blue Book.

How long will this trend hold? It depends on what the future holds. During his trip to the Super Bowl, president Donald Trump announced a 25% tariff on all steel and aluminum imported goods.

If that goes into effect, the price dips seen by some manufacturers could go away. To demonstrate, a $25,000 car imported from Canada or Mexico could increase up to $6,250, according to S&P Global Mobility.

And car manufacturers would pass that cost onto the buyer. Therefore, if you're in the market for a new vehicle, sooner than later might be your best bet before the proposed tariffs could into effect.

Other factors impacting car affordability

Of course, driving a car comes with more costs than just that purchase price, and drivers have been feeling a crunch across multiple waves.

Kiplinger's energy outlook predicted gas prices to rise. While we enjoyed lower prices at the pump for a hiccup, it appears costs are back on the upswing, with a $3.11 gallon average.

Auto insurance premiums are soaring, and, as the Kiplinger Letters team reported, new cars that feature advanced safety systems can have higher insurance rates because those systems cost more to replace in the case of an accident. There are, though, ways to save on insurance by comparison shopping:

On the flip side, however, there's always the EV tax credit if you choose to get an electric vehicle. And if you're not comfortable getting a new car quite yet with prices as they are, you can at least rest easy considering keeping a car longer is sometimes better for the environment anyways, if you don't drive all that much, according to Outside magazine.

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This offer has expired, but you can read our review of a new discount from Costco on Volvo, Chevrolet, Cadillac and Polestar models.

Tap into the Costco Auto Program for a new 2023 or 2024 Audi or other vehicle. As part of a limited-time offer, the program will provide an additional discount — up to $3,000 — for purchasing or leasing selected new models of Audi vehicles.

Costco Auto Program overview

Costco has established relationships with over 3,000 dealerships nationwide that meet its customer service standards. Costco also trains dealers to implement its discount program, so you shouldn’t find a clueless salesperson when you get to the dealership. 

The program is free to all Costco members. Before you join Costco to get one of these promoted auto discounts, know that only customers who have been members since February 29, 2024, will qualify. 

To get access to the discount, go to the Costco Audi discount page, update the page with your zip code and click on "register for a certificate online." You can also access the discount and learn more through the Costco Auto Program. Either way, you should register online to receive a certificate with your unique promotion code. Then, bring the certificate to any Audi dealership and take delivery of an eligible model by May 15, 2024.

Sweet, right? And Audi is promoting a 0.99% car loan interest rate for 60 months for select 2024 vehicles through 4/1/2024. To secure that rate, you'll need to have excellent credit. 

The Costco Audi discounts

To access the Costco Audi discount, you must purchase or lease your vehicle and take delivery by May 15, 2024. Your certificate code will entitle you to the following discounts on new 2023 or 2024 models.

• $1,500 on Audi A3, S3, A4, S4, A5 Coupe, S5 Coupe, A5 Sportback, S5 Sportback, A5 Cabriolet, S5 Cabriolet, Q3, Q4 e-tron®, Q4 e-tron® Sportback, Q5, SQ5, Q5 Sportback, SQ5 Sportback, Q5 PHEV
• $2,000 on Audi A6, Q7 45, SQ7, SQ8, Q8 e-tron®, SQ8 e-tron®, Q8 e-tron® Sportback, SQ8 e-tron® Sportback, Q8 (model year 2023 only)
• $3,000 on Audi A8, S8, e-tron® GT, RS e-tron® GT 

Other discounts offered by the program

If you're looking for a car besides an Audi, the Costco Auto Program may still help you save at the dealership. For current Costco members, log in to your account and go to the auto program website. As with any other service for purchasing new or used cars, you enter the make and model you're looking for and follow directions. Before you are given a final price, you will provide personal details and contact information so that dealers may contact you.

Costco has already negotiated a discounted price with the dealer so that you can avoid the dreaded haggling with the finance office at the dealership.

If you can get a better price elsewhere, decline the offer and go to a different dealer.

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Toyota's U.S.-based financing arm was fined $60 million Monday by a government consumer watchdog group for preventing auto buyers from canceling unwanted add-ons to their car loans, and other illegal practices. 

The Consumer Financial Protection Bureau (CFPB) said that Toyota Motor Credit Corporation (TMCC) violated the Consumer Financial Protection Act and the Fair Credit Reporting Act by stopping borrowers from canceling product bundles that added to their car payments, withholding or issuing incorrect refunds, and falsely claiming that borrowers had missed payments — which hurt their credit reports.

After thousands of complaints by consumers, a CFPB investigation found that TMCC prevented consumers from canceling bundled coverage products, including Guaranteed Asset Protection and Credit Life and Accidental Health insurance, by making the process “unreasonably difficult.” Consumers who tried to cancel over the phone were sent to a hotline operated by employees whose job it was to dissuade cancellations, the CFPB said. About 118,000 consumer calls were routed to this hotline between 2016 and 2021, and consumers had to verbally request a cancellation three times before a TMCC employee would tell them that they could only cancel by sending a written request.

TMCC also failed to refund, or issued incorrect refunds, for prepaid premiums to consumers who had paid off their loans or ended their leases early. Toyota's U.S.-based financing arm also falsely reported customer accounts as delinquent to consumer reporting agencies, even though the leased vehicles had already been returned. 

Toyota Motor Credit is required to:

• Pay $48 million to consumers, including nearly $32 million to people who didn't receive refunds, $9.9 million to people who tried to cancel their coverage but weren't allowed to, $6 million to those whose credit was harmed by false reports sent to consumer reporting companies, and at least $52,000 to people who received the wrong refund when canceling their service agreements.
• Stop illegal practices, including paying employees based on their ability to get consumers to stay in bundled products. TMCC also has to make it easier for consumers to cancel coverage, monitor dealer partners who sell the add-ons to consumers, and let consumers know how they can cancel or remove the add-ons online or through the mail. 
• Pay a $12 million fine to the CFPB’s victims relief fund.

"Toyota's lending arm illegally withheld refunds, made borrowers run through obstacle courses to cancel unwanted services, and tarnished their credit reports," CFPB Director Rohit Chopra said in a statement. "Given the growing burdens of auto loan payments on Americans, we will continue to pursue large auto lenders that cheat their customers."

What does the CFPB do?

The CFPB sends about 25,000 complaints about financial products or services to companies for a response each week, and most companies respond within 15 days. Consumers can submit complaints by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).

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In the market for a car? There are a few hopeful signs for buyers with cash, according to Ivan Drury, director of insights at Edmunds, the car shopping experts. Used-car wholesale prices peaked in the spring, and have declined 10% since then, though prices are still 55% above their prepandemic levels. November and December are usually good months to buy, as prices start to reflect the imminent turn of the calendar and an extra year of depreciation. Expect prices to drop by another 10% in 2023 because of a slow-growing economy.

For buyers who must borrow, it’s a different story. Average loan rates keep climbing along with Federal Reserve interest rate hikes. Rates on used-auto loans are now 9.2%, with an average term of 70 months. Loans for new vehicles are at 5.9%, and also 70-month terms. Zero-interest incentives are often offered only for short time periods, such as 36 or 48 months. High interest rates are keeping some would-be buyers out of the market altogether, but are mostly having the effect of driving more buyers from the new to the used-car market because of affordability issues.

Normality in the used-car market is still a long way off. Late-model used cars are still scarce because car owners have had to hang on to their current vehicles longer, meaning trade-ins are typically older now. Also, fewer late models are being turned over from rental fleets. Cars coming off lease are often being purchased by their lessees, as the optional purchase price agreed upon three years ago can be a bargain today. Fewer new leases are being made, because lease costs have gone up even more than prices with the disappearance of manufacturer and dealer incentives. Only 17% of current leases are being renewed, down from 30% before the pandemic. Domestic car production is nearly back to prepandemic levels, but long backorders are still discouraging some prospective new-car buyers and sending them to the used market. Some new Toyota and Honda models are still simply unavailable. All of this means that used-car prices are likely not coming all the way back down to where they were in 2019.

When Michael Lowe turned 50 this year, he bought a new Subaru Forester that he expects to drive for the next decade. As a result, he thought ahead to how his mobility might change and realized bending over was proving to be more of a challenge.

“Carrying grocery bags from the car to the house has become a little more difficult the last few years, mainly due to the bending over and reaching down in the trunk,” says Lowe, who lives in Phoenix. “My new car has a raised trunk and seats so I don’t stoop to pick up any goods or groceries anymore. It’s helpful now but will be vital in a few years.”

Choosing the right car is never easy, but older buyers have the added problem of trying to anticipate how changes in lifestyle and health might affect the kind of vehicle they will need over time. Traditionally, August is when car buyers can expect bargains from dealers clearing out old inventory to make room for next year’s models, but this year, the pandemic and recession have upended things. Some dealers still have unsold 2019 models, even as they’re trying to unload 2020 vehicles to make room for 2021 models.

“The ’19s are going to be anvils sitting around on the dealer lots,” says Karl Brauer, executive publisher for Autotrader and Kelley Blue Book, in Irvine, Calif.

For newer models, the deals will be hard to find as dealers hold the line on price. With sinking demand and shuttered factories during the spring, May inventory fell to the lowest point in 18 months, leaving fewer new cars on dealers’ lots.

Evolution of Use

If you’re in your 50s or 60s, your next car may see you through some big changes, from full-time work to retirement or from athleticism to arthritis. So think about how your use of the car might evolve over the life of your ownership. Along with features like passenger capacity, fuel economy, comfort and storage space, consider the ease with which you can park and get in and out of the car.

Are you a new or expectant grandparent who plans to install a child’s car seat? Do you have older relatives or friends who need more leg room? Will you be driving long distances? Do you have back, hip or other health issues that could affect your use and comfort in the car now and in the future?

“If something is somewhat of an issue, it could get worse as time goes on,” says Jessica Caldwell, executive director of insights at Edmunds, a car-shopping resource, based in Santa Monica, Calif.

When Caldwell’s mother bought a car, she prioritized cargo space for a walker and a trailer hitch for attaching her electric scooter. “My mother is only 63. These mobility issues came on fast and furious,” Caldwell says. Her mother got the trailer hitch and something more important: a car with a door that opens wide, making it easier to get into the vehicle.

Test drive whenever possible to gauge comfort and ease of use. “Seat comfort is hugely important, more so than ever once you get to a certain stage in your life,” Brauer says. “You want to be able to drive without worrying about lack of support.” The Goldilocks car seat is one that’s not too squishy and unsupportive, but not so snug that it’s difficult to slide in and out. “You want to be able to drive a long distance without specific components or aspects of the seat impinging on your comfort,” Brauer says.

The same goes for choosing between a sedan and an SUV. Depending on your height and the ingress of the vehicle, some sedans may seem too short and some SUVs will be too tall.

Pay attention to the interior control panels and labels. The larger, clearer and more legible they are, the better. “Some cars have more complex and busy control interfaces versus simple straightforward knobs, big buttons and displays that are easier to figure out and read,” Brauer says.

As you age, your range of motion can become more limited. Some vehicle features, like a backup camera or blind spot detection, can compensate so that you don’t need to turn your upper body to look for obstacles.

Safety Features

Backup cameras also improve safety, which older drivers often take more seriously. Lowe, for example, wanted a car with adaptive cruise control that would keep the car at a safe distance from other vehicles on the highway despite changing traffic speed.

“I’ve noticed my reactions slowing a little over the last few years,” he says. “This gives me peace of mind of reacting too late to a decelerating car.”

Before John Zimmerman turned 60, he shopped for cars based on style. Now that the retired county government official is 64, safety matters more, especially with all the driving he’s doing. Between helping with his brother’s furniture business and assisting his elderly parents, Zimmerman drives twice as many miles now than he did before he retired. And sometimes he carries precious cargo—his grandkids, ages 1 and 3.

Last year, he bought a 2019 Honda CR-V, a midsize SUV with a wide body, providing easy access to two children’s car seats, and automatic emergency braking, blind spot monitoring, rear cross-traffic alert and adaptive cruise control.

“It has all the nice features that an older driver would want,” says Zimmerman, who lives in New Brunswick, N.J. The rear cross-traffic alert is especially helpful when backing out of a parking space. “In a supermarket or mall, it’s hard to see cars zipping past you,” he says.

Of course, the newest computerized features can take some getting used to. Be sure you understand how they work on a prospective vehicle. “A little bit of awareness can reduce confusion,” Brauer says.

For example, lane-keeping assist forces a car to stay within its lane, unless you signal. Drivers who don’t understand this feature may think there’s something wrong with the car, because it feels like the steering wheel’s pulling out of your hands.

Not all safety features are high-tech. For Zimmerman, the height of his new CRV gives him a better view of the road compared with the Hyundai Sonata he previously owned.

“It was a nice four-door midsize car, but it was low to the ground and it was hard for my passengers to get in and out,” he says about his last vehicle. His in-laws who are in their 90s find the new SUV to be a more manageable height.

Zimmerman originally looked at the Toyota RAV-4, but the model had just been redesigned in 2019. “I’m always leery of buying a car the first model year they redesigned it because it seems like they have bugs they need to get out of it,” he says.

Getting a Good Deal

With the economy likely to continue struggling for some time, an older buyer in a position to make an offer should still negotiate.

“Older drivers often have better credit, so they’re apt to take advantage of 0% financing and leasing offers,” Caldwell says. But deals on financing are getting scarcer, though Caldwell remains optimistic. “The incentives have to stay because a lot of people are not in that place to buy,” she says.

Once you know what you want, cast a wide net to find the best deal, and if the features are similar, consider buying an older model, which dealers will be more eager to unload.

“If there’s a ’19 of exactly what you want, color and everything, you can negotiate hard,” says Brauer. Keep in mind that sedans may be more plentiful than pickup trucks and SUVs, which had lower inventories earlier this summer.

If the dealer with the best price is a long drive away, ask if the car can be delivered to you. Many dealers are offering free touchless delivery during the pandemic.

OUR READER

Who: Devon Madison, 23

Where: Philadelphia

Question: I graduated last year and need to buy a car. How do I get a loan?

Devon works as a special education elementary school teacher, her first job since graduating from Vanderbilt University last year. She has been driving her parents’ 2002 Honda Civic, but she wants to cut the cord. "I want to buy a reliable used car that’s not a clunker," she says.

Like many young people, Devon can't afford to write a check for a trouble-free used car, which she figures would take at least $10,000. She has some savings for a down payment, and she'll need to borrow the rest—and that's the problem. A few months ago, she found a car and applied for a loan at her own bank. She was turned down. Then she applied to another bank. No dice. Devon even talked to a credit union, but the prospects didn’t seem encouraging so she didn’t apply.

There's no indication that Devon is a high-risk borrower. She applied for and got a credit card when she graduated, pays her rent and other bills on time, and is starting to repay her college loans. Both banks said her credit score was more than respectable (See 6 Things to Know About Credit Scores). So what’s the roadblock?

"Not having any negatives on her report is a plus, but the lack of a solid credit history definitely makes it hard to get her first loan," says Gerri Detwiler, director of consumer education for Credit.com. Because rent and utility payments aren't reported to credit bureaus unless you're delinquent, a credit card can build a history if you make small purchases and pay them off like clockwork. But what if you need a loan right away?

It may pay to skip banks and head straight to the car dealer, says Claes Bell, auto expert at Bankrate.com. "Dealer financing tends to have looser standards," Bell says. Dealers often set up agreements with lenders to send buyers their way in exchange for lenient loan criteria. Also, some manufacturers, such as Honda and Toyota, offer recent graduates (within two years) special loan programs for new and certified used cars through their captive finance companies. For example, Honda offers deferred payments for three months with two months of zero interest if you put at least 5% down and have proof of employment.

Regardless of your credit history, the more cash you bring to the table, the more likely you are to get the keys. Devon has about $2,000 saved toward a $10,000 vehicle; for used cars, lenders like to see 20% down, so she’s in good shape. Plus, auto loans are historically cheap, with rates for 60-month loans averaging 4.5%. So even if Devon doesn’t get the best terms, her payments should be affordable.

She did it! Shortly after our interview with Devon, she found a 2008 Honda Civic for just under $12,000. She persuaded the dealer over the phone to lower the price to $11,000. She was preapproved for financing on the dealer's Web site, and she got a rate of 5.2%. The car was not certified, so she couldn't apply through Honda's new-grad program. But a certified car would have been more expensive, and Devon wanted to stay close to her budget. The payments for six years are a manageable $200 a month and will build her credit history.

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