Consumers that delayed buying a car between 2020 and 2023 are in a much better spot to buy in 2024, experts say, as sticker prices drop due to recovering inventory levels.

High interest rates on auto loans, however, remain a barrier despite car manufacturers' upping incentives for potential buyers.

Still, it's a good time to buy a car, and it's going to be that way for at least the remainder of the year, said Andrew Guthmiller, founder and owner of Minnesota-based Car Concierge, a national advisory business that guides shoppers through the car buying process.

"If you can find the car you like, you can probably get it for a deal that's nearly as good as what it was in 2019," Guthmiller said.

In March, the new light-vehicle inventory in the U.S. totaled 2.58 million units, an increase of 40.2% compared with March 2023, according to the National Auto Dealers Association (NADA). Rising inventory coupled with incentives from car makers led to average transaction prices falling to $44,186, down 3.6% compared with March of last year, the NADA reported.

"Consumers finally have a little more choice," said Patrick Manzi, NADA's chief economist. "They're not just going out and shopping based on what's in stock."

For most vehicles, buyers are able to pay at or below the manufacturer's suggested retail price as dealers move quickly to sell their inventory, especially if trying to meet sales targets, Manzi said.

However, current interest rates on loans are "scaring off" potential buyers, slightly dampening sales, Guthmiller said. Dealerships are also paying higher rates to keep vehicles on lots, a process called floor planning. Floor plans are a form of financing that allow dealerships to purchase cars. Dealers pay off those short-term loans, with interest as much as $2,000 per vehicle, as they are sold, Guthmiller said.

"That really cuts into the profit margin, so there's a lot of motivation to sell cars right now because they don't want to pay floor-plan interest rates on large quantity of overhead," Guthmiller said.

Average auto loan rates on new cars dropped from 9.73% to 9.6% in March, according to Cox Automotive, the Atlanta auto data company that owns Autotrader and Kelley Blue Book. New car rates peaked at 9.9% in October 2023, the company said. Average rates on used car loans, meanwhile, lowered from 14.33% to 14.1% in March. The average used car rate — higher given the buying pool likely includes people with lower credit scores — reached a 24-year high of 14.59% in February.

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