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Growing up in the age of the internet and technology, online shopping is second nature for Gen Zers.
One-third, 32%, of Gen Z consumers shop online at least once a day, according to data from marketing firm Tinuiti.
Yet, 80% of Gen Z drivers prefer to shop for a car in person. Only 9% prefer to do so online, according to a recent report by Cars.com, which defines Gen Z adults as those between ages 18 and 28.
“When we’re talking about them finishing a deal in person, it means they’ve already done extensive research online,” said Rebecca Lindland, senior director of industry data and insights at Cars.com. “There’s a lot of benefit to going in person and finishing that deal.”
The Cars.com survey was conducted from August to September and had 4,000 participants split evenly across four generations. Baby boomers were the only generation more likely than Gen Z to purchase a car in person, with 89%, while millennials were the most likely to prefer buying online, with 16%.
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Affordability is important for Gen Z adults, who are facing many challenges as they approach early adulthood and enter the workforce. On top of student loan debt, they face high housing costs and lower wages.
Buying a car in person allows you to test drive the vehicle. It can also help you negotiate with the dealer, who may be inclined to offer discounts at the point of sale.
“Aside from your house or housing, a car is usually the next in line for the highest transaction that people will face. Any time you can get that number down is a good thing,” said Paul Waatti, an industry analyst at market research firm AutoPacific.
Car prices are expected to stabilize in 2024
While the cost of a new car is still generally elevated, prices are beginning to cool down due to higher inventory and dealers offering incentives.
The average transaction price for a new car in the U.S. was $48,759 in December, according to data from Kelley Blue Book, a Cox Automotive company. Although it represents a 1.3% increase from the prior month, it’s a 2.4% decline from a year ago.
Used car prices are also expected to stabilize by the end of 2024. The average listing price for a used car last month was $26,091, down 3.9% from a year earlier.
Indeed, “the shift from a seller’s market to a buyer’s market is well underway,” said Michelle Krebs, executive analyst for Cox Automotive, in a statement.
While only 25% of Gen Z drivers would finance their cars through a dealership, per Cars.com, they can use the market shift to their advantage.
“Gen Z doesn’t get the credit for being as savvy as they actually are,” said Waatti. The share of those who use dealership financing shows they’re being underestimated.
Getting your own financing is ‘usually a better deal’
Before going to the dealer, look into direct lending from banks or credit unions. Shopping around for an auto loan is crucial if you’re going to the dealer in person because you won’t have to rely on the dealership financing. You show up with an understanding of what outside financing and payment options you’re eligible for.
“It’s usually a better deal trying to get your own financing rather than going into a dealership and just accepting what they have to offer,” said Waatti.
Make sure to get preapproved financing, even if you’re still open to accept offers from a dealership. “Having options is really key when going in to make a transaction,” he added.
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