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How Does the Decline in New Car Inventory Affect New Car Loans?

Fewer new cars in stock means higher prices, which can affect your auto loan options. See how this might affect your next auto loan and how TDECU can help.

How Does the Decline in New Car Inventory Affect New Car Loans?


The supply chain disruption caused by the COVID-19 pandemic has had far-reaching impacts on the auto industry. The shutdown of automotive and semiconductor chip production plants led to a global chip shortage, which meant far fewer vehicles were available to dealerships and consumers. Although production is now ramping up again, the short supply of computer chips continues to impact the auto industry.

Computer chips are integral to the electronics in cars. Microchips are used in the radio, A/C, navigation system, brakes, airbags, alarm system, cruise control, and so much more. In fact, as automakers include more sophisticated features like lane assist, extensive infotainment systems, and in the case of Tesla, driverless cars, new vehicles require more chips than ever. Needless to say, with a semiconductor chip shortage, the auto industry and car buyers have had to make some tough decisions. Consumers are wondering whether now is a good time to buy a car. Price, features, inventory, and loan rates are all important factors to consider when deciding whether to purchase a car now or wait. 

Fewer New Cars, Fewer Features, Higher Prices

Due to the ongoing chip supply issue, car manufacturers are continuing to limit the production of their cars, compounding the existing car shortage. As restrictions on people’s movement because of the pandemic lessened, however, car shoppers came out in droves and scooped up the new and used vehicles on showroom floors. With the global auto industry producing 1.5 million to 5 million fewer vehicles in 2021, dealers couldn’t restock fast enough to keep up with demand. 

The resulting low inventory means sticker prices are climbing. The average price for a new car purchase is at a record high of $46,000. The shortage means that negotiating a new car deal is virtually impossible, and certain makes and models may be hard to find. Whether looking for a Chevrolet, Honda, Kia, or Toyota, or a sedan, pickup truck, or SUV, chances are your car buying options will be impacted.

Car and Driver reports that even if you can find the car you are looking for, you may need to forego some features in new model year vehicles. For example, GMC is eliminating heated seats and steering wheels; General Motors announced the elimination of wireless smartphone charging spots; and, Ford is limiting satellite navigation functionality. The good news is that some of the features can be added post-market.

Save Money with Falling New Car Loan Interest Rates

Don’t lose all hope in your upcoming car buying excursion. This may actually be a good time to buy a new car. Used car trade-in values are high since used vehicles are also in high demand, so use your current car to help bring down the final amount you owe. Pre-ordering a new vehicle is an increasingly popular option. Not only can you get a car that is not currently in inventory, but you can also save money. When you pre-order a car designed to meet your needs, you can select a car with only the features you want (assuming they are available) allowing you to save money by not paying for features you don't want. The downside is the wait for a new car could be several months or more.

Another way you may benefit by buying a new car now is with a new car loan. Even as car prices rise, new car loan interest rates are falling. The interest rates are low enough that the difference in the money you will save on interest payments could offset the higher vehicle price. 

TDECU has new car loans to meet your needs. We offer competitive interest rates, starting at 2.49%, discounts, and flexible payment plans. With TDECU you can get affordable monthly car payment plans customized to your needs, with terms extending as long as 84 months. We won’t hit you with hidden fees, costs, or early-payoff penalties either. 

Check out our auto loan calculator to find out how much car you can afford. Adjust the down payment amount, number of months for payback, loan interest rate, and more to assess different scenarios.


Fill out an online TDECU loan application, or contact a TDECU car loan representative to finance your new car today.

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