By the time the coronavirus was sweeping the nation, Ali Jian, 42, a consultant in northern Virginia, already knew he wanted to replace his 2014 Subaru Forester with something bigger for his growing family. He decided on a new minivan but held off buying because dealers wouldn’t budge much on price.
But the pandemic forced many dealerships to close in March and April, and auto sales plummeted. The glut of inventory from the slowdown in sales led to deals and incentives, including 0 percent financing, deferred payments, and big discounts.
Jian decided this past spring was the time to buy. He focused on a 2020 Honda Odyssey he found through Costco’s car buying service, which gave him access to a nationwide network of more than 3,000 dealers. Costco offered a guaranteed price that was more than $6,000 below the manufacturer’s suggested retail price (MSRP), and connected him with a local dealership that had the vehicle in stock and a buy-at-home option
The dealer offered to bring the car to Jian for a test drive, as well as other models for comparison. He decided instead to stop by the dealership to test-drive the Odyssey alone and also to look at other colors.
The sales staff, who had sanitized the car and wore masks and gloves, stayed 6 feet away from him.
After Jian confirmed the purchase, dealership representatives—wearing masks and gloves—delivered the minivan to his house with the final papers he needed to sign.
“We worked on the patio; they didn’t even come in the house,” Jian says. “In 5 or 10 minutes, we were all done.”
As foot traffic dried up earlier this year, car dealerships were forced almost overnight to change how they sell cars. Buy-at-home “contactless” options were already a small but growing part of the market, but the pandemic significantly increased the number of dealers taking part.
Michelle Denogean, chief marketing officer at Roadster, a company that specializes in helping dealers set up the infrastructure for online sales, says these transactions used to comprise 5 to 10 percent of car sales. By mid-May that had risen to about 27 percent. “The pandemic threw us five years into the future in about five days,” she says.
Depending on where they live, many prospective buyers can now arrange all aspects of a new- or used-car purchase from their couch, including securing financing and arranging for a test drive.
Specific rules vary from state to state, but a typical online sale involves several steps outlined below. CR recommends doing a lot of research on models and dealerships beforehand.
Choose a car. If you have a model in mind, you can probably build a vehicle virtually by mixing and matching options on a “configurator” application at an automaker’s website. It can be helpful to keep a spreadsheet of attributes—such as cargo space, passenger room, available safety systems, and fuel economy—so that you can easily compare different vehicles.
All-Access and Digital CR members can go to our ratings of tested models to find high performers and those with the three advanced driver assistance systems (ADAS) we think are essential for safety: forward collision warning (FCW), blind spot warning (BSW), and automatic emergency braking (AEB) with pedestrian detection. We also offer ratings for predicted reliability and reliability history based on member surveys that typically cover more than 400,000 cars of various makes and model years.
Our April 2020 print edition of the magazine is dedicated exclusively to vehicle ratings. Car shoppers can go to our online store to order it or one of our specialty publications featuring ratings and buying advice, such as our New Car and Used Car buying guides.
Find a local dealer. Search online for a dealer that has the car you want and offers a buy-at-home option. Most new-car dealers have an online presence, and a simple search will find one nearby that has the model you want or can order it from another dealer. You can usually negotiate the price and any options you want with a salesperson by email or phone.
Car buying services like Costco’s can also usually find the model you want at a nearby dealer. Autopia, another service, allows online users to input options they want into an algorithm that searches for incentives and finds the best deals nearby.
CR members can use our Build & Buy program, a service that allows them to configure the car they want, compare local transaction prices, and have dealers provide their best offer. Our service taps TrueCar’s network of more than 15,000 dealers, many offering contactless buying or buy-at-home options, including at-home test drives and home delivery, which might be offered by dealers that don’t advertise it.
Set up the test drive. Make sure the dealer you choose offers an at-home test drive, if that’s what you want. In some cases, a dealer might agree to bring you more than one car to test-drive so you can compare. It’s important to understand how the car feels on the road, says Gabe Shenhar, associate director of CR’s auto test program. You can also test the controls and experience other features, such as gauging seat comfort and assessing how easy the infotainment system is to use. Dealers that won’t bring a car to you may let you take a test drive without a salesperson if you show your driver’s license and proof of insurance.
Secure financing and other incentives. Many dealers now offer special financing approvals online. It means you’ll never have to set foot inside the dealership’s finance and insurance office, where someone might try to sell you extras, such as an extended warranty. Most automakers are offering low- or no-interest financing if you have good credit, and some dealers are also willing to negotiate. Some loans from other online sources can be finalized with electronic signatures; others require paper documents with signatures.
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If You Can Buy New, Be Sure to Get a Deal
Despite the pandemic and economic uncertainty, this might be the perfect time to buy a new car.
To entice consumers worried about job security—and to clear out an inventory glut due to slow sales—car manufacturers and dealers have pushed low-interest and 0 percent financing and loan terms of seven years and longer for new cars, with initial payments sometimes deferred by two or three months. Other common incentives include cash back or deep discounts off the manufacturer’s suggested retail price (MSRP).
In conversations with dealers, analysts, and other industry insiders, Consumer Reports found that dealers this spring had about a four-month supply of vehicles on hand—the norm is one or two months—so they’ve generally been willing to accommodate potential customers.
According to data from TrueCar, the average savings below MSRP was about 10 percent in April compared with 8.6 percent at the same time last year. For example, Chevrolet was offering up to $8,500 cash back on certain Silverado pickups, in addition to 0 percent 84-month financing or 120-day payment deferments. Subaru was offering 0 percent for 63 months. Jeep was offering $3,250 cash back and 0 percent for 84 months on certain Grand Cherokees. There are also deals at local individual dealers.
In general, CR’s experts advise caution in taking out long-term loans, though in the right situation they can represent big savings over time. By stretching out the loan terms without additional interest, you can buy more car while keeping monthly payments the same or lower. But you should remember that at some point over the course of the loan, the car will be worth less than what you owe. In the event of an accident that totals the car, you could end up still owing money on the loan even after the insurance payment.
Eric Lyman, senior vice president of ALG, TrueCar’s analytics and forecasting division, says the idea behind the deals and special offers is to increase consumer confidence during a time of economic uncertainty. For someone who can keep a vehicle for seven or eight years, a longer-term loan at 0 percent can be beneficial. But consumers who switch vehicles every few years might be better off with a lease, he says.
Alain Nana-Sinkam, TrueCar’s vice president of strategic initiatives, says that consumers who take out 0 percent loans on new cars can come out ahead if they invest the money they would have spent on interest payments in something that could gain interest or something like a mortgage that would lower financial liability. “A savvy and engaged consumer would take the 0 percent 84-month loan and siphon the monthly savings into an investment,” he says.
Consider the Merits of Buying Used
Even in a healthy economy, the smart money is usually on buying used.
And pricing aside, there are advantages to buying used, especially models that have low mileage and are only a few years old. These are the used vehicles most likely to have up-to-date advanced driver assistance systems (ADAS), as well as the best reliability, as judged by our CR member surveys.
The advantage over new cars is well-known: Depending on the model, depreciation can make used cars a lot less expensive. A new car on average loses slightly more than half of its value in the first three years. But if you buy a highly rated, CR-recommended used vehicle, you might be happy for years to come.
Wholesale used-car prices fell 10 to 15 percent in April but rebounded in the first half of May, according to the Manheim Used Vehicle Value Index. As the volume of used cars picks up over the summer and into the fall, retail prices were expected to fall as well.
But despite lease extension offers, many customers had opted to turn in their vehicles on time, adding to the surplus of newer used cars.
Jeremy Anspach, CEO of Purecars, says that although forecasters had predicted falling used car prices this summer as rental car fleet reductions and lease returns flooded the market, an alternate reality took shape. “People want more vehicle for less money, so there’s no fire sale in pre-owned vehicles since demand is very high,” Anspach said.
The economic slowdown affected used-car vendors in much the same way it hit new-car dealers: Inventory sat on the lot while potential customers stayed home.
According to a survey by the National Independent Automobile Dealers Association (NIADA), an organization that represents used-car dealers, about a quarter of its members were open for business as usual by the end of April.
“Every month a car sits on a lot, the dealer pays for it somehow,” Shenhar says. “If cars have collected and gathered dust for two, three, or four months, dealers are going to bend over backward to clear them off. That goes for used-car dealers, too.”
If a dealer offers online sales and other buy-from-home options for its new cars, it’s likely to offer the same services for its used-car inventory. Carvana, a national used-car sales platform, has more than 21,000 cars that consumers can browse and buy online. Once a deal is reached, depending on where the buyer lives, documents are either signed electronically or sent through the mail. In many places, the buyer can receive delivery of the vehicle at home.
In late March, Carvana announced in a news release that “all vehicles are available for home delivery, as well as the peace of mind of a 7-day return policy.”
The takeaway from talking with industry analysts, and studying transaction data, is that the car market has been very volatile. Deals can always be found, but consumers need to do their research and not react based on past trends.
CR’s Used Car Marketplace
All-Access or Digital CR members can search our Used Car Marketplace for vehicles for sale in their area, sorting by the factors that matter most. The listings include CR’s reliability and owner satisfaction ratings, and most vehicles include a free Carfax report, which gives a detailed history of each used car.
Members can also access ratings and information on used vehicles as far back as 20 years. The best way to choose a vehicle that will go the distance is to look at its reliability history, which CR provides online with our standard vehicle ratings.
Make Your Current Car Last . . . and Last
Even with great deals out there, not everyone is in a financial position to take advantage of the savings. Sometimes you just have to love the car you’re with.
If you own one of CR’s best used cars likely to go 200,000 miles or more, you already have an advantage. Whether you have a Toyota Camry, the top car on the list, or a Jeep, not nearly as reliable, staying on top of periodic maintenance is a must if you want your vehicle to last.
More consumers are following this course. According to ALG, TrueCar’s analytics and forecasting division, the average age of cars on the road has risen to nearly 12 years, an all-time high. For a car that’s been driven 15,000 miles per year, that would put it at 180,000 miles. What follows are strategies for keeping your car going.
Follow the manual. For starters, stick with the maintenance schedule in your vehicle’s owner’s manual. If you’ve lost the manual, you can order another online or buy one at the dealership. Owner’s manuals for many vehicles—a 2012 Honda Accord, for instance—can be downloaded free as a PDF.
Oil changes and other fluids. Oil, transmission fluid, coolant, and even brake fluid should be checked regularly. The best rule of thumb is to follow the manufacturer’s recommendations. Note any fluid loss and look for impurities that could be a telltale sign of a larger problem.
Belts and hoses. Periodically inspect them for fraying and cracks; have them replaced if they’re worn. Cracked hoses can cause engine damage, and worn brake and fuel lines could cause an accident and life-threatening injuries. A broken belt can leave you stranded.
Avoid cheap parts and fluids. If you’re buying parts, avoid cheap knockoffs, which can fail sooner than original parts from the manufacturer. Consult the manual to make sure that the fluids you’re adding are compatible with manufacturer specifications. For example, using a noncompatible coolant or oil can damage or destroy the engine, and putting the wrong brake fluid in the reservoir can have catastrophic consequences in terms of safety. Use premium fuel if recommended; lower grades can cause damage to the engine and its sensors over time.
Don’t overdo it. There’s such a thing as overmaintaining a vehicle with unnecessary services. Be wary of repair services that push maintenance not spelled out in the owner’s manual, such as changing the oil every 3,000 miles.
It may not be too late to start. If you’ve fallen behind on scheduled maintenance, you can still get back on track. Have your mechanic inspect the vehicle for obvious problems. Use touch-up paint on chips and scratches, and repair small rust spots before they spread. When you’re driving, listen for odd noises that could indicate that something needs to be fixed.
Eventually, there will come a time when you need to say goodbye to your old car. That’s when it becomes unreliable despite frequent repairs, rust damage compromises the structural integrity, there’s serious damage from flooding or an accident, or a repair is just too expensive to justify keeping it.
Shop CR’s Car Buying Service From Home
The Consumer Reports Build & Buy Car Buying Service is evolving to face the challenges of shoppers’ needs during the pandemic. The core service engages a nationwide network of more than 16,000 participating dealers to provide upfront pricing information and a certificate to receive guaranteed savings off MSRP. A growing number of dealerships are enrolled in a Buy From Home program, enabling buyers to complete the buying process without going to the dealership.
Participating dealerships will take you through the paperwork remotely and deliver a sanitized vehicle right to your home, all at a fair price. When using the Build & Buy Car Buying Service, accessed through the car model pages, you will find Buy From Home participants denoted by a special banner highlighting “Buy from Home: Have your vehicle delivered to you and complete your paperwork at home.”
Editor’s Note: This article has been updated since it appeared in the August 2020 issue of Consumer Reports magazine.
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