Car Prices Skyrocket as Buyers Battle Over Short Supply

Buying a car right now can be very frustrating. Supply is low, demand is high, and the prices for new and used cars have jumped.

"Prices are definitely up on new cars and used cars," said Todd Lane, CEO of Cal Coast Credit Union. "The pricing difference between a current year model and a used car is almost non-existent."

Cal Coast does financing with dealerships. Lane said for years, 60% of their car loans were for new cars and 40% for used cars. Now, that's completely reversed as 60% of their loans are for used cars and only 40% for new cars. That's because of a big drop in supply.

"You'd go to a dealership and their floor plan was just full of cars everywhere," said Lane. "You go there today, there may be one make or model on the floor that you could buy and multiple people bidding for it."

One reason is because of a semiconductor chip shortage, which is preventing new cars from being delivered to dealerships.

"Car prices on average are higher by 25 percent compared to the previous year," said Eddie Garces at Carfax. "We've never seen the levels of prices increase as they are today."

That price increase is also affecting used cars. Garces said there's even a 20% higher value on trade-ins.

"We've never seen the levels of prices increase as they are today," he said.

Lane does have some advice for people looking to buy cars, however.

First, he said you can still get loans, but they'll likely be larger than you hoped because of the high price of cars.

"Interest rates are still low so they are still in their favor," said Lane. "We're looking at our best pricing for model years that are six to seven years old."

But if you can afford to wait, Lane says that might be your best course of action.

"Now may not be the best time to buy a car," said Lane. "Now, that's hard coming from a lender. My business is by and large lending to people who are buying automobiles, but if you can wait a little while, that would be best."