Used car prices are through the roof these days as demand increases. There are a few reasons for the spike in prices, but supply and demand seem to be the biggest reason. If you need to buy a reliable used car right now and find a good deal, jump on it before another buyer does.
Why are used car prices so high right now?
There are a variety of reasons for the price in used car prices. One of the reasons is related to the semiconductor chip shortage. Automakers are having a hard time keeping up with the demand for new cars. This means that there are fewer new cars on the lot for buyers to choose from.
Since there are fewer new cars, many drivers are looking at used cars to fill the gap. Additionally, many dealerships have been raising prices over MSRP due to demand. This 2021 Kia Telluride is marked up over $25,000 because the dealership says it is “the most highly-rated SUV on the market.”
According to CNN, the average new car price in the first quarter of 2021 was $37,200. That is up 8.4% from the same time last year. Most buyers are paying within 5% of the MSRP, but some are paying more.
For used cars sold at auction, prices are up 26% over the beginning of the year. Retail used cars are up 7% in comparison.
Supply and demand
Much like the housing market, experts advise buyers to move quickly. Lauren Donaldson, senior director of accounts at PureCars, says that there are benefits to this. “The silver lining for consumers is that even though prices are higher, your trade-in will never be worth more than it is today, and that may put you in a better position to purchase a newer car,” told Consumer Reports.
The U.S. Bureau of Labor Statistics says used car prices have jumped 21% over April of last year. 10% of the entire increase came from April 2021 alone.
In the last few months, used car prices sent buyers looking for new cars instead. However, that has switched again due to the lack of inventory. Automakers are making fewer cars which means there are fewer cars available to choose from.
Another issue stems from the rental car drama of 2020. Many fleets sold off a significant amount of cars to offset the lack of business. Now those same businesses are being forced to buy used cars to keep up with demand.
What should you not discuss with a car salesman?
If you are not the most knowledgeable person about cars in general, don’t fret. But also, don’t mention it. If the seller knows you don’t know anything, the salesperson can try to sell you all kinds of unnecessary upgrades.
As far as the salesperson is concerned, you are knowledgeable and confident about your future purchase. Do your research ahead of time to know the price of a car you might be interested in. You can do this on the specific dealership website or just by checking Google for locally available cars.