2023 Was a Terrible Year to Buy a Car. What's in Store for 2024?

For many of us, a car isn't simply a want, but a need. And if your car has seen better driving days, then you may be gearing up to replace it in 2024.

That's something you may be worried about, though, and understandably so. Car prices were high in 2023, and financing rates were expensive. Buying a car in 2023 wasn't good for many people's personal finances.

But will things improve in 2024? Maybe, to some degree.

Vehicle prices have been trending lower

In November, Kelley Blue Book reported that new car prices have been falling for most of 2023. And while they rose slightly in October to $47,936, prices are still down 1.4% on an annual basis and 3.5% since peaking last December.

If this trend continues, car buyers may not have to dip into their savings accounts in 2024 to quite the same degree as they might've had to this year. But to be clear, we shouldn't expect the auto industry to suddenly be laden with bargains. Although supply chain issues have improved, there's hardly an abundance of cars on the market, so buyers shouldn't expect to see steep discounts.

Financing costs could be high

The typical consumer can't necessarily afford to pay for a car outright. That's where auto loans come in. But these days, borrowing rates are up across the board on the heels of the Federal Reserve's string of interest rate hikes. The Fed may be in a position to cut rates in 2024 if inflation continues to cool. That could result in a world of relief for borrowers, and it could lead to more affordable auto loan rates.

But it's premature to say with certainty that borrowing rates are going to fall. And we can bank on higher auto loan rates to start off 2024 at the very least. That's something to keep in mind if you have no choice but to finance your vehicle.

How to save on a car purchase in 2024

Buying a car may not be quite as expensive in 2024 as it was in 2023. But there are steps you can, and should, take to save even more.

First, shop around at different dealerships and be open to different vehicle models. If you've got your heart set on a single model, you'll leave yourself with less negotiating power.

Better yet, be open to buying a used vehicle, as it may result in a world of savings. As of November, used car prices were down 3.8% on a year-over-year basis, according to that month's Consumer Price Index.

Along these lines, before you overpay for added features, ask yourself how badly you really need them. If you live in an area where the winters don't get all that cold, you probably don't have to spring for heated seats if they cost extra.

Finally, do your best to boost your credit score. The higher that number, the more competitive an interest rate you might manage to snag on an auto loan. You can raise your credit score by paying bills on time and checking your credit report for errors.

Ideally, 2024 will end up being a better year to buy a car than 2023 was. And if you approach the process strategically, you might manage to eke out even more savings.