Is it the right time to buy a used car?
Buying a used car has many benefits, including slower vehicle depreciation, lower insurance costs, and a lower initial price. The current state of the new car market reinforces the last point – new vehicles hit record highs at the end of the summer – making this a good time to consider buying a used vehicle.
Current state of the used car market
The summer ended with high prices, the average used car sold for $28,219 in July and the same for $28,061 in August, according to Kelley Blue Book. But used vehicles are still significantly cheaper than what’s available on new car dealer lots. Since the start of the pandemic, the vehicle market has drastically deviated from normality and slowly returned to normality without much success.
But it’s not all bad news. Although we are not close to 2021 used price and availability levels, we are well positioned to buy used, encourages Chris Frey, Cox Automotive’s senior director for economic and sector information.
Unfortunately, the cost of financing, owning and operating vehicles is still at record highs. Rate increases made by the Federal Reserve make the cost of financing your vehicle more expensive, and gas prices also fluctuate. But financing for a used car is still lower than for a new car at $515 per month compared to $667 in the second quarter of 2022, according to Experian. Thus, by choosing to finance a cheaper used vehicle, you can save money on your monthly payment.
Used car prices fall, but only slightly
Overall, used prices are falling, according to Henry Hoenig, data reporter for Jerry, but not by much. Jerry’s team looked at the top-selling vehicles in 2022 and compared them to lightly used 2021 models and found that, “In August, only seven of the 10 vehicles were worth more than the list price on used models.” This means used car prices are still higher than they have been historically, but on par with current market volatility.
The inventory of used vehicles available also remains much higher than that of new vehicles, as dealers continue to try to catch up with supply chain issues. So, while prices may be higher than they have been in the past, the availability of used cars is greater than that of new cars. Used-vehicle inventory rose 10% from the same period last year, according to Cox Automotive’s third-quarter industry insights, a positive sign for the year ahead.
“Prices remain high because there are still not enough vehicles,” says Hoenig. “It’s important to remember that this isn’t like some of the other COVID-related shortages we’ve had.” While makers of other everyday products were able to pick up fairly quickly, cars are harder to produce.
It’s important to remember that the used car market is built on drivers getting rid of their vehicles, so if there aren’t as many drivers buying new, there can be a domino effect. on second-hand availability across the board. Because of these factors combined, you may face more competition and slightly higher used car prices, but that doesn’t make buying a used car a bad option.
Should I buy a used car?
The question of buying a used car comes down to a need. There is no ideal time to buy a car, especially with many macro-environmental impacts driving up costs. Because while experts predict new vehicle inventories should return to normal by the spring of 2023, most motorists don’t have the luxury of waiting for prices to drop.
If you’re looking to buy a vehicle, buying used rather than new can save you money. The combined factors of high demand for new vehicles and low inventory with interest rates above usual levels make vehicle costs more expensive in both cases, but buying used is considerably cheaper .
Top 5 Questions to Ask When Buying a Used Car
Although buying second-hand comes with a lower price at the door, it can lead to additional fear related to an unknown vehicle’s past. To alleviate these feelings, ask the right questions to understand the story of your potential new wheelset.
1. What is the ownership history of the vehicle?
A vehicle with many owners isn’t always bad news, but it can mean that the car had major problems that drivers were trying to avoid fixing – or couldn’t fix. Ask the dealer how many owners the vehicle has had, as well as how long each driver has had it. Many owners on short periods are concerned.
Discount rate advice
Consider buying a Certified Pre-Owned vehicle. These vehicles must meet additional requirements created by the manufacturer and guaranteed against any defects in the vehicle.
2. Has the car had any accidents?
Although you can easily check a vehicle’s accident history on sites like Carfax or AutoCheck, it’s best to ask the dealer beforehand. Even if the accident was minor, it is important to know how the damage was handled and whether you will face any repercussions during ownership.
3. Can I consult the maintenance sheets?
Most authorized car dealerships will have records of the maintenance performed on a vehicle, but asking directly can be a good way to gauge vehicle maintenance. You should avoid buying a vehicle that has not undergone regular maintenance, as this could result in higher costs down the road.
4. Is there a clear vehicle title?
A clear vehicle title indicates that the car has no outstanding ownership disputes, confirming that the vehicle has no restrictions that prevent it from being sold. If the seller can’t present a clear vehicle title, consider that a red flag and drop the deal.
5. Can I take the car out for a test drive?
It is essential to get an idea of the vehicle before signing on the dotted line, especially when it is a used car. Take your time during the test drive and try to get an idea of the car’s handling and condition. It’s also a great opportunity to talk in a less intense environment and ask the salesperson questions about the vehicle.
Buying used is a great way to get behind the wheel of a relatively new vehicle while saving money. And while so, prices today may be higher, buying used is still cheaper than a brand new option. The key to getting the best used car is asking the right questions and finding the best financing deal.