Buying a used car has been particularly annoying over the last two years. Seeing prices for used models exceed the MSRP of a new model is enough to make any self-respecting person want to climb up the walls. Well, good news; according to Consumer Reports, average used car prices are falling, but there is a catch.
When will used car prices drop?
We made it, y’all! Finally, we are released from this insane used car hell. Hold your horses. Yes, it’s true. According to Consumer Reports, after historically high used car prices peaked in 2021, prices are officially coming back down. The stickers still have a long way to go considering how far they have climbed, but a 3 percent drop, on average, shows that things are heading in the right direction. Unfortunately, as we said, there is a catch.
The dropping prices come alongside rising interest rates. As it tends to be, the dropping prices only help those with enough cash not to need financing. Although buyers will enjoy slightly lower prices right now, the higher interest rates mean paying more throughout the loan.
Is now a good time to buy a used car?
For most people, the right time to buy a used car is when you need it. However, Consumer Reports suggests a few tips for buying a used car wisely, regardless of the market.
- Act quickly: The time to buy a car is when you find a good deal. The marketplace is changing so quickly that waiting out isn’t always the right play. If you find the model you want for a price you can afford, there is no guarantee that you will have that same vehicle available to you tomorrow.
- Be informed: a well-informed buyer is capable of making a quick decision in the car market. If you know what you are looking for, a fair price range, and the potential issues for said model, you can make a sound decision quickly, if needed.
- Consider buying new: Buying a new car can sound like a frivolous luxury to many car buyers. However, in this market, buying new could work to be a better deal overall. Pricing is close in lightly used, and you get a fresh factory warranty on new cars. You are also more likely to find a manufacturer’s deal on new cars than on used cars from a dealership.
- Look at older models: Prices on older models are dropping the fastest as used car prices start to fall. With older cars often comes higher mileage. Consumer Reports suggests focusing on cars with a reputation for reliability.
- Get your own financing: Before buying a car, see what your bank or credit union will offer you for a loan. If nothing else, this will provide context for what the dealer’s loan looks like. This may also give you more negotiating power.
- Don’t be too picky: This last bit of advice can be a hard one to follow. However, the more open you are with things like trim level, color, and even year model, the easier it will be to find a car that you can afford. Be open and honest with what you need and can afford. It will save you heartache in the long run.
Should you buy a new or used car?
The car market is a crazy place, even with prices starting to drop. Despite falling used car prices, Consumer Reports still suggest that you hold off as long as possible on buying a used car. New cars are often the better buy as long as you aren’t getting tied up in crazy dealer markups. With higher interest rates, buying a used car can have you owing money on a more quickly depreciating car for longer. Remember to stay informed, open, and realistic. Good luck out there.