Flipping cars has been a side hustle for years as a way to make a little extra cash. But in an era of rising used car prices and online vehicle ordering, the game has changed — and the profits are much higher.

Here’s how car flipping works: A person orders an in-demand vehicle from the factory at a fixed price. When it arrives months later, the vehicle’s value rises; because of the current car market, it can be sold at a profit.

Yes, there are related fees — sales tax and registration — and it can be risky, as you can’t guarantee the price will increase after you have the car. But it’s become so popular that it’s caught the attention of carmakers, which are trying to clamp down on the practice.

For instance, the Ford F-150 Lightning, a truck that sold out before production started, comes with an agreement stating that the buyer won’t resell the truck for at least a year (this additional agreement is included at the dealer’s discretion), as reported by car news website Carscoops. And, GM will cancel the warranty on the popular Chevrolet Corvette Z06 if it’s resold in less than a year, according to auto site Jalopnik.

A modern way to buy new cars

The trend these days is for highly anticipated models to be ordered online and built to the buyer’s specifications. Buyers will have to put down a deposit, usually only a few hundred dollars, and they can decline the car later if they change their mind.

Electric cars and hot new models, such as the Corvette Z06 or Cadillac Escalade-V, are the prime target of flippers because the rollout is slow and inventories are limited.

Success stories

While some buy a car with the intention of reselling it, that’s not the case for all car buyers. Sometimes the idea of flipping a vehicle occurs to an owner because they see car prices climbing and figure, well, why not?

Kirk Dunn, a Long Beach, California, contractor took advantage of both kinds of flipping. He saw the value of his Chevrolet Silverado pickup increase so much he sold it to Carvana for a $3,500 profit. Over the following months, the market stayed hot, allowing him to purchase two new trucks, then flip them at a profit and enjoy driving newer and better models.

“I can’t even tell you how many hours I spent negotiating and researching,” he says. “But it was a game and kind of fun.”

Similarly, I was driving a 2014 Volkswagen Jetta SportWagen, which cost me $13,000 out the door. I had no intention of selling it — until I realized Carvana would give me $16,800 for it, even after I’d added 30,000 miles to the odometer.

Risky business

While the current car market is still hot, with electric vehicle prices rising five times faster than gas car prices, according to a study by iSeeCars, the fun might be coming to an end. In fact, used-car prices have begun to soften recently.

According to car research site Edmunds, the average transaction price for 3-year-old vehicles was $31,302 in July, a 4.6% decrease, or $1,526, compared to their peak of $32,828 in January.

“There’s a gamble that prices could settle down between when you buy it and when you flip it,” says Richard Arca, director of vehicle evaluation and analytics for Edmunds.

“This situation won’t last forever,” says Karl Brauer, iSeeCars executive analyst. “Time it poorly, and you’ll be stuck with that new car, or have to sell it for a loss.”

And then there’s the sales tax and registration fees that will cut into your profits. In California, for instance, those fees come to $5,745 for a $50,000 vehicle. That’s a big nut to crack.

Before you flip

Successfully flipping a car starts with having a good eye for the market so you can buy low and — hopefully — sell high.

Start by looking up the value of the car you want to flip in pricing guides such as Kelley Blue Book and Edmunds. Here are a few additional tips from the experts to help you decide whether flipping is worth the risk.

• Get estimates from online car retailers, such as Carvana, Shift, Vroom and CarMax.
• Estimate all fees and the cost of any work that has to be done to the car.
• Look for a well-maintained model, with low miles and few owners, if you want to flip a used car.
• Make sure there isn’t a penalty or restriction on selling the car you’re considering buying.
• Consider whether the amount of money you’re expecting to make is worth your time and effort.

And finally, choose a car to flip that you wouldn’t mind owning in case the music suddenly stops and the market finally cools off.

Philip Reed writes for NerdWallet.

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With the cost of gas soaring, it’s not uncommon to hear people say, “I’ve really got to buy a hybrid.”

If your goal is to save money, this could be a disastrous move unless you needed a new car anyway. While you might save money at the pump, the cost of prematurely switching from a gas hog to a fuel-sipper would take years to pay off.

Why? You’re probably paying about $1 a gallon more for gasoline than you did a year ago. In a 25-mpg vehicle driving the average yearly mileage of 14,000, that would be $560 out of your pocket — enough to hurt.

But the average price paid for new cars has risen by 10 times that amount in the last year alone, topping $46,000 in October, according to Kelley Blue Book. Proportionately, used car prices are up even more than that.

It’s about the worst time possible to buy any car unless you absolutely have to. If your vehicle has been stolen or totaled, by all means look at a more fuel-efficient replacement.

But if that’s not the case, remember that gas prices rise and fall quickly; there are ways you can adjust that don’t require the commitment of 72 monthly payments. Instead of switching cars, the key to savings is pretty simple: Buy gas wisely (using a gas price app), maintain your car, and improve your driving style.

Note that I didn’t say “drive more slowly.” It is possible to boost your fuel efficiency and not turn into an annoying tortoise on the highway.

Buying smarter and cheaper

Choose regular over premium. Begin your money-saving strategy by purchasing the right grade of gas. While your car’s owner’s manual might recommend that you run premium, you can safely switch to mid-grade or even regular. “The modest fuel economy improvements found in AAA tests do not offset the higher cost of premium gasoline,” the American Automobile Association reports.

Compare prices with a gas app. The price of gas varies significantly from one station to the next, and one part of town to another. Instead of driving around to find the best price on gas, use a gas app such as GasBuddy to find the cheapest place to fill up.

But don’t drive 10 miles across town to save a penny on gas. While a gas app will show you the cheapest gas in your area, make sure the savings can erase the extra fuel consumed getting to that cheaper station.

Use gas cards and shopping clubs. Some credit cards will give you a rebate when you buy gas. Combine this with the discounted price of gas at shopping clubs, such as Costco, and the savings is substantial.

Maintenance and modifications

Besides a modest increase in fuel economy, the following maintenance tips have added benefits. Your car will last longer and you will drive safer.

Perform scheduled maintenance. In most cases, this calls for oil and filter changes and tire rotations. You should also change your air filter periodically. It’s cheap and you can even do it yourself.

Monitor tire pressure. Keeping your tires filled to the manufacturer’s specifications will give you better fuel economy, reduce tire wear and provide better handling.

Remove underused accessories. Roof racks and special carriers cause an aerodynamic drag on the highway, which puts a dent in fuel economy, according to AAA. If you’re not using them, lose them.

Skip the gadgets. That miracle device that boosts gas mileage to 200 mpg? It doesn’t exist. Consumer Reports once tested three such fuel savers and found no change in fuel economy. In one case, there was actually reduced performance. Their takeaway: “The best way to get the best mileage from a tank of gas is to follow the vehicle manufacturer’s service schedule and fine-tune your driving habits.”

Fine-tune your driving

Fine-tuning your driving style, especially if you have a larger vehicle, can lead to big savings at the pump. Many benefits await you if you open your mind and try something new.

Avoid aggressive driving. The biggest gas waster is unnecessarily aggressive acceleration combined with sudden braking. Doing so can lower your gas mileage by up to 30%, according to Fueleconomy.gov. Instead, accelerate moderately (unless you need to merge suddenly) and back off the gas when you see a red light in the distance.

Stop prolonged idling. If you plan to stop for more than 60 seconds, AAA says to shut off the engine to save fuel. Many newer cars already come equipped with an auto start-stop feature.

Drive the speed limit. Gas mileage decreases at speeds over 50 miles per hour. Every 5 mph you drive over 50 mph, you’re paying the equivalent of $0.18 more per gallon of gas. So if you reduce your speed by 5 to 10 mph, you can improve your fuel economy up to 14%, according to the U.S. Alternative Fuels Data Center.

Use cruise control. By driving at a steady speed, you avoid wasting gas with mid-range acceleration. A steady pace is also more relaxing and a good way to remind yourself to drive at — or near — the speed limit.

The article Don’t Spend a Dollar to Save a Nickel on Gas originally appeared on NerdWallet.

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If you’re shopping for a new or used car in today’s overheated market, you’ll find that the game has changed. A variety of conditions have seemingly given sellers the upper hand.

“Skimpy inventories and sky-high prices have caused many buyers to postpone their purchases,” says Michelle Krebs, executive analyst for Cox Automotive, a leading communication, media and automotive service company.

Postponing your purchase until the market stabilizes is the best option. But if you have to buy a car now, make sure you avoid these five common mistakes:

1. Being unprepared

This is a new car-buying environment and you may need to reset expectations. Here are the significant adjustments to be aware of before you can snag a car:

Pricing. Most buyers are paying sticker price or above, and “there is no end in sight for price increases,” says Ivan Drury, senior manager of insights for Edmunds.com, an online resource for automotive inventory and dealer reviews. For used vehicles, “the ceiling keeps rising as new transaction prices reach all-time highs,” he says.

Krebs says that the average transaction price for a new vehicle soared to more than $45,000 in September. And while this figure might seem exaggerated, it is not. According to Kelley Blue Book, while Americans bought 7.3% fewer cars in September than in August, the average price for a new car was $45,031.

Inventory. Since new-vehicle inventory is about 2.5 million units less than it was at this time in 2019, according to Krebs, you will have to conduct a broader search to find the car you want. It helps to be flexible when choosing a brand, color and options, as well as whether you buy a new or used vehicle.

Timing. With inventories so low, make sure you’re ready to buy when you find a car that’s available at a competitive price. “You snooze, you lose,” Drury says. “The days on the lot are getting to the lowest levels we’ve ever seen.” With today’s high demand and low supply, cars don’t sit on the lot and often sell before arrival.

If you can’t find the car you want on the lot, ask what cars are being shipped to the dealership and reserve one. Be prepared to pay a deposit to hold your car as soon as you select one.

2. Losing money on your trade-in

Used car values have shot up and dealers are scrambling to beef up used car lots. This puts you in a stronger position when trading in your old car — if you follow a few simple steps:

• Using a pricing guide, such as Kelley Blue Book or Edmunds, look up your car’s value, adjusting it for condition, options and mileage. Also, check automotive classifieds, such as AutoTrader, to gauge the asking price in your area.
• Get offers from used-car-buying sources such as Carvana or CarMax. Keep in mind that these prices might change after your car has been inspected.
• After you agree on the price for your new car, see if the dealer can beat the researched price or the online quotes you got for your trade-in. If it won’t match it, sell your car to the highest bidder and use the money as a down payment on your new vehicle.

Keep in mind that, depending on the state you live in, even if the dealer’s price is lower than other sources, a trade-in might reduce the amount of sales tax you will pay on your new car.

3. Not getting preapproved financing

Getting preapproved for a car loan will help you identify any credit problems before going to a dealership. Preapproved financing also provides other advantages:

• It offers you a chance to set up your own loan with the right down payment and loan term.
• It may simplify dealership negotiations by allowing you to focus on the “out-the-door price.”
• It could serve as a bargaining chip in getting the dealer to offer a better rate.

4. Buying unnecessary extras

With low inventories and high buyer demand, dealers are loading up their cars with profit-boosters, according to Oren Weintraub, president of Authority Auto, a concierge car-buying service in the Los Angeles area. Such upsells include additional warranties, anti-theft devices and dealer add-ons such as mudguards and wheel locks.

You can flush out these hidden charges early by asking for the out-the-door price, which then empowers you to tell the dealer what you want and what you don’t need.

5. Ignoring the out-the-door price

Given the likelihood you’ll see some additional markups on most cars, it’s essential to focus on the big picture: the out-the-door price. Does it matter if the paperwork includes $595 worth of anti-theft window etching you never asked for, as long as you hit the overall price you wanted?

The out-the-door price is a single, simple number that reveals the specific cost of everything — the car, registry fees, taxes, dealer-added extras. It’s a number you can write a check for and drive away or take to the finance office to arrange a loan.

A similar and dangerous distraction is when the dealer focuses only on the monthly payments. But, if you’ve prearranged a loan or used a car loan calculator, you should have an idea of what you can borrow and what the payments will look like.

The article 5 Car-Buying Mistakes to Avoid in Today’s Overheated Market originally appeared on NerdWallet.

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When the price of oil spiked during the February deep freeze, I started using a gas price app and was amazed to find that the cost of fuel in my area varied by 70 cents a gallon. By purchasing the cheapest gas, I could save $8.40 each fillup and as much as $220 a year.

As we come out of the pandemic and pump prices climb, it’s once again time to be smart about your gas purchases. With some simple planning, a household with two cars could easily save the cost of a car payment each year. And businesses with a fleet of vehicles have much more to save.

Combine the following strategies to maximize your savings and perhaps find other rewards, too. (Of course, buying gas at a bargain is only half the opportunity; you can drive in a way that stretches your gas even further.)

1. Use a gas price app

If you do only one thing, this is it. A recent study by GasBuddy concluded that convenience — going to nearby or familiar gas stations — was the biggest money-wasting culprit. Shopping around on a gas app will quickly show you the cheapest gas in your area or along your intended route.

“People think that the difference between $2.00 and $2.21 is not that much,” says Patrick De Haan, head of petroleum analysis for GasBuddy. “But if they are buying 20 gallons every week, the savings adds up fast.” In cities, prices can vary by as much as a dollar a gallon, he says, making the savings even greater.

While GasBuddy is perhaps the best-known gas app, there are others available. And you can filter the results to show the price of different fuel grades and which stations offer diesel.

2. Choose a good rewards program or credit card

Many such programs abound, but drilling down — pun intended — to the savings is difficult. Here’s a quick look at the important factors to consider when choosing the best card for saving money on gas:

• Annual fee: If a credit card carries an annual fee, it can quickly wipe out your initial savings. However, if the card offers robust savings in other areas too, it might be worth it.
• Reward caps: Some gas savings are capped either per quarter or per year. Figure out what your spending is and determine whether it fits under the card’s rewards cap.
• Redemption value: Make sure you understand what each rewards point is worth. Many are a penny, but some are even less. Also, once you accumulate points, what can you redeem them for?
• Pump or gas station: Some cards offer rewards on anything bought at a filling station, while others specify their gas rewards are for pay-at-the-pump purchases only.
• Membership requirements: Are there membership costs that ding you or is it a hassle to join?

Remember, if you are using a credit card, pay off the entire balance or the interest will wipe out any gas price savings.

3. Buy from a warehouse club

Filling up at one of the warehouse clubs is a great way to save if you don’t mind the trade-offs, such as membership fees and long lines. The Costco in my area was selling regular gas for 45 cents lower per gallon than my county’s average price as reported by AAA. But keep in mind that you have to offset a $60 yearly membership fee, and long lines means you’re weighing your time versus savings. Still, you could go early in the morning since the pumps open well before the store does.

4. Buy the right fuel for your car

Purchasing a higher grade fuel doesn’t necessarily benefit your car. Look in your owner’s manual or on the gas cap: Is it “recommended” or “required”? For cars that merely recommend it, premium gasoline may slightly improve performance and fuel economy, according to Greg Brannon, AAA’s director of automotive engineering and industry relations.

But if your car doesn’t require premium, don’t bother. When you buy lower grade fuel, “The savings you get is much greater than the cost of the drop-off in fuel economy,” Brannon says.

5. Pay cash

Most gas stations advertise a cash price that is cheaper than the credit card price. This might mean bringing paper money — remember that stuff? — and paying the clerk inside. But at some stations, using a debit instead of a credit card will also get you the cash discount.

If you opt for a debit card, make sure you’re getting the discount before you start pumping since not all stations allow this. And keep in mind that debit card transactions are less secure than using a credit card since thieves could intercept your PIN code and empty your coffers.

6. Fill up before a spike

Natural disasters and severe weather can eventually bring higher gas prices to your area. For example, the deep freeze in Texas forced the shutdown of Gulf Coast and some Midwest refineries and drove up gas prices by 13 cents in one week. You can easily check prices in your area on AAA, which also predicts oil price increases.

The article Put the Cap on Gas Prices: 6 Ways to Save at the Pump originally appeared on NerdWallet.

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