By Steve Garmhausen

The auto industry had a nice fat sales spike in March, as buyers rushed to lock in purchases amid fears that President Donald Trump's tariffs would jack up car prices by thousands of dollars. But the president's unpredictable decision-making has created a dilemma for consumers who have been planning big purchases like automobiles or real estate: Should they hurry up and buy now, or wait in the hopes that any inflation spike will be less than feared or will come and go quickly? For this week's Barron's Advisor Big Q, we asked several financial advisors: What is your advice for consumers planning to make major purchases?

Greg Wells, regional director, EP Wealth Advisors: I'm getting this question quite a bit from clients, especially about cars. My answer is generally, don't let the tariffs dictate your decision too much. If we had clarity that the tariffs were going to be one thing on a specific date, I think we could deal with it, but the situation is fluid and changing all the time. The news cycles are changing so quickly. Demand for cars has gotten higher because many people are buying, trying to get ahead of tariffs. During Covid, we saw demand get really high because supply was low. The moral of the story is, the car you want is probably going to be there in a few months, so there's no real urgency to rush it just to make sure you get the car you want. I would encourage most people, unless they urgently need a car, to wait and see. We could have a very different world out there on tariffs in a few months, and you might end up getting a later model. The same with buying a home -- the idea that, "Oh, I have to buy a house now because I don't know if interest rates are going to go up or go down." I think that answer might be different after lunchtime. So I wouldn't base the big buying decisions on that.

Larry Sprung, founder and wealth advisor, Mitlin Financial: I don't ever recommend that people do things out of fear or greed, because it usually makes for bad decision-making. But at the same time, we're dealing with what seems to be a real situation. Tariffs are definitely a real concern for people. So if the money for a purchase is already set, and it was something you were going to do anyway, it may make sense for you to go ahead and make that purchase, perhaps a little bit sooner than you were planning to. If the planned purchase was still a few years off and you're thinking about ramping up the timeline because of what's going on in the news, it may be worthwhile to sit back, relax, take a deep breath, and stick to the plan. The only thing we know is that we're in an uncertain environment in terms of the tariffs and their impact. Over the past couple of months we've seen them on and we've seen them off.

We work with a client who is in the auto industry, and they were telling us that their dealerships were looking to simply sell the cars on their lots that have not currently been affected by the tariffs. Because they're trying to hold off as long as possible on buying new automobiles that are subject to tariffs. They're concerned that if they make a large purchase of vehicles today under the tariffs, those tariffs may not be here in one or two months. That just substantiates the idea that in some cases it might be worthwhile to just sit, take a deep breath, and see how things play out.

Jared Hoole, president, Lakeside Financial Planning: With tariffs potentially driving inflation higher, my advice for consumers is to take a closer look at the distinction between wants and needs, especially when considering big-ticket items like houses, vehicles, boats, even exotic vacations. Housing fills the need of providing stability and shelter. In many cases, it can be used as an investment that appreciates over time. On the other hand, it's easy to rationalize a new car as a necessity when your current one is still reliable. If your car is functioning well, replacing it might be more of a desire than a need. A new car is close to $50,000 now, and the average monthly payment is $700.

And if you're borrowing money for big purchases, be aware of financing costs. For example, if you're looking at a $50,000 auto loan, you can end up actually paying more than $61,000. Another thing that has been impacting multiple clients and friends of mine is the current job market, where we're seeing some instability in sectors like education, manufacturing, climate resilience, and government. Layoffs and budget cuts are a reality in today's market, and if you're in one of those sectors, you should definitely evaluate your job stability before taking on additional debt. The last thing you want is to take on debt from a major purchase and then have a loss of income.

Jeremy Zuke, financial planner, Abundo Wealth: We always have tried to separate what's in your control and what's not in your control. Federal government policy and the possible resulting inflation would fall in the bucket of outside your control. What's in your control when it comes to big purchases is not stretching yourself too far. We've seen a lot of people buying the house or the car at the top of their budget, or at the top of the approved loan amount. So one of the first things you can do is make a sober evaluation of your budget and make your purchases fit it. And be mindful of longer-term costs, not just upfront costs. People will tell me, for example, that a Mercedes is in their budget, But if you then go to Consumer Reports and look at the 10-year cost of owning a Mercedes, you'll find you're going to pay thousands and thousands of extra dollars that you might not have factored in. The same thing is true for a home. If you buy a 130-year-old place you might end up facing huge renovation expenses. In terms of tariff impact, markets are very hard to predict. Twelve years ago, there were many headlines that said interest rates have nowhere to go but up. It was common wisdom. It actually took 10 years from then for rates to go up. Don't rush to buy because you think inflation is coming. It could just as well be the case that there's deflation, which happens in economic slowdowns.

Write to advisor.editors@barrons.com

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April 23, 2025 15:55 ET (19:55 GMT)

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