Used Car Values on the Rise

Used Car Values on the Rise

If you’re like most people in the market for a new (to you) vehicle, you’re probably allowing the state of the economy to factor heavily in your decision-making process.  What this means is that you are likely leaning towards purchasing a used vehicle rather than spending more on a new one when you could face unemployment (and repossession) at any time.  Most people these days simply don’t feel like they can afford to take a risk on a new car (even if their finances would allow it).  But considering that the price of used cars has gone up significantly over the last couple of years, you may want to rethink your strategy.  Here’s the why and how of it.

First of all, you should be aware of just how much prices have gone up.  Kelly Blue Book has shown an estimated increase of 39-45% on vehicles that are three years old (the most popular amongst those seeking used cars).  And used-car retailers are reporting price bumps of $1,000 to $2,000 across the board, which means you’ll get more on a trade-in, but you’ll also end up paying more when you purchase a used car.So how did we get here?

The recession has certainly played its role.  While the housing market favors buyers, with astronomical price drops in property values over the last few years, just the opposite has occurred in the car market.  Automakers facing fewer sales have had to cut back on manufacturing in order to reduce costs and stay afloat.  In addition, they have stopped offering rebates and bumped up the price tags on their products, in essence striving to make the same amount of money even though they are selling fewer vehicles.  This, in turn, has led to increased demand in the used-car market (where prices are always going to be lower than buying new).

But that’s not all.  Remember the Cash for Clunkers program of a few years ago, whereby the government offered to buy up used cars from the public in order to turn them into valuable scrap metal?  Well, the incentive program meant to stimulate the economy worked so well that we ended up with a shortage of used cars.  And of course, the earthquake in Japan halted production in several major automobile manufacturing plants, making for a decided lack of new economy class vehicles in western markets.  All of this has contributed to a rise in prices for used cars.

But how can consumers take advantage of this trend?  If you’re looking to trade in your current vehicle, you’re in luck because you stand to get more money than you would have a couple years ago.  On the other hand, you’ll also pay more if you plan to purchase a used automobile, virtually negating the extra influx of cash.  And with the previous model yearof cars netting over 70% of their original value, you might come very close to the cost of a brand new car anyway.  So your best bet is to get what you can out of your trade-in and put it towards a new vehicle (which comes with no mileage and a full warranty).

Sarah Danielson writes for Lubrication Specialists, a car website offering the best car parts and accessories at affordable prices. If you are looking for a Fumoto valve or an Espar heater, you’ve come to the right place.

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