A used car dealer opens on 27.
Jim Watson | AFP | Getty Images
Used car prices have gone up, and you can potentially turn this into your favor.
Given the relentless demand and limited inventory of new and used cars, you won’t find much leeway in the prices shown. However, the good news for consumers is that dealerships are paying more for used models – which you may have in your driveway.
“So many dealers say ‘we want used cars’,” said Ivan Drury, Edmunds.com senior manager of insights.
An ongoing global shortage of microchips – key components needed to power today’s automobiles – has impacted manufacturers’ production of new vehicles, causing demand to outpace supply. The result was fewer discounts across the board, with some cars selling for more than the sticker price and demand spilling over into the used car market.
“As always, the new car and used car markets are linked,” said Joe Wiesenfelder, editor-in-chief of Cars.com. “High prices in one affect the other, and there we are.”
The average price for a used vehicle rose more than 21% from $ 20,900 last year to about $ 25,400. Buyers are paying about $ 40,800 for new cars, up about 4.9% year over year.
“It is difficult to estimate how long it will take for things to improve,” said Wiesenfelder. “All of this depends on the new car population returning to healthier levels.”
While dealerships don’t offer as many discounts or negotiate prices as much as they did before, truck trade-ins are “through the roof” and auto trade-ins are also high, said Len Stoler Automotive Group President Barry Stoler said.
“What [buyers] Losing discounts they get when they trade in because those values are so high, “said Stoler.
Even vehicles with a higher mileage can get more than you think. The average amount paid for cars with mileage between 100,000 and 109,999 rose 31% last month to $ 16,489 from $ 12,626 last month, according to Edmunds data.
Trucks topped the list with the strongest year-over-year increases in average prices in this high-mileage category. For example, the Chevy Silverado 1500 sold for an average of $ 26,914 in June, up 49% year over year.
Even if you think the car you are trading is not worth much, with prices increased, it can fetch more than you currently expect. And this is where your negotiating skills come in: you may not be able to bring the price down, but you may be able to ask for more on your trade-in.
“When you have a trade-in, it makes the deal better,” said Drury of Edmunds. “The dealers want this trade-in.”
Even cars that are nine years old have averages that are up about 30% year over year, Drury said.
As you near the end of your lease, you may be able to buy it for less than you would pay for the car if it were on a dealer’s property now.
This is because the residual value – the value of the vehicle at the end of the lease – was determined when the lease was signed a few years ago.
“These leases started before anyone knew there was going to be a pandemic or a chip shortage,” said Cars.com’s Wiesenfelder. “There’s a good chance the market will say the vehicle is worth more than it was meant to be.”
If you are considering this route, be sure to know your state’s applicable sales tax regulations as it can add to the cost of the buyout. according to Cars.com.