Is now the best time to buy a used car? Experts weigh in on post-pandemic pricing trends
BURBANK, CALIFORNIA - MARCH 10: A used 2020 Tesla Model 3 is available for sale on a CarMax lot on March 10, 2022 in Burbank, California. According to the Department of Labor, the price of used vehicles increased 41.2 percent since last year, despite
With each passing year since the start of the COVID-19 pandemic, it’s looking better and better to buy a used car.
Car prices spiked shortly after the 2020 pandemic forced plants to curb production of computer chips that are vital to auto manufacturing. As vehicle availability shrank, prices soared.
By 2021, some dealers had no new cars at all in stock. Many frustrated buyers turned instead to the used market. The resulting surge in demand for used cars caused those prices to surge, too, elbowing many people out of the auto market entirely.
But experts say prices are starting to cool.
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"Buying a used car today is better than it has been in nearly four years," Ivan Drury, director of Insights at Edmunds, told FOX Television Stations. "We're not back to when it's like a $5,000 car or a $10,000 used car is readily available. That's definitely not the case today. But we're also not at the point in which used cars were essentially selling for the same price as new cars"
The average price of a used vehicle — $27,297 as of January — is down 3% from a year ago and 12% below the peak of $31,095 in April 2022.
Analysts expect used auto prices to fall further before rising slightly once the peak buying season resumes in the spring.
"Every month is getting better than the month before," Drury continued.
However, unlike with new vehicles, there’s still a limited supply of used cars, trucks and SUVs, which will likely serve to limit any price declines. That’s mainly because the sluggish sales of new cars since 2020 has resulted in fewer trade-ins and vehicles coming off leases into the market, thereby keeping used-vehicle supplies tight.
"If you had to buy a used car today, you can feel a lot less pain than if you did decide to do it if it was a month ago, a year ago, and definitely better than anything in 2021 or 2022," Drury added.
But Drury said consumers shouldn’t totally rule out a new car. With interest rates high, Drury said some people are choosing not to buy a new car. However, that leaves dealers to offer various incentives to get the new cars off their lots.
Tips on buying a used car
The primary difference between purchasing a new versus a used car is cost. While purchasing a used vehicle can make a lot of sense in the short term, you have to keep in mind the potential long-term maintenance and repair costs that come with owning a used vehicle.
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"You got to get your budget figured out," Drury said. "It's kind of like you got to come down to the reality of what do I really need versus want."
According to FOX Business, one should always consider the mileage on a used car before buying. If this number is too high, you’re likely going to be paying a lot of repair costs while you own the vehicle. In cases like this, it may have actually made more sense and saved more money to buy the more expensive new car.
Also, keep in mind that some cars last longer than others. Again, this is why research is so important. Before purchasing a used car with higher mileage, take a look at how long that particular car usually runs for and be sure it's going to last you.
The Associated Press and FOX Business contributed to this report. This story was reported from Los Angeles.