Used car prices have gone up. How to make it work for you

Certainly, the prices of used cars have increased. You may be able to make this work in your favor.

With relentless demand and limited inventory for new and used cars, you won’t find much wiggle room in the prices you see. The good news for consumers, however, is that dealerships pay more for used models – than you might have been sitting in your driveway.

“So many dealers are saying ‘We want used cars,’” said Ivan Drury, senior knowledge manager at Edmunds.com.

More from Personal Finance:
Stock market volatility can be an opportunity for investors
Where are the efforts to raise the federal minimum wage?
Covid scams cost Americans nearly $ 500 million

A continuing global shortage of microchips – key components necessary for today’s automobiles to operate – has impacted the production of new vehicles by automakers, resulting in demand exceeding supply. The result was fewer discounts offered across the board, with some cars selling for more than the sticker price, and demand spread to the used car market.

“As is always the case, the new car and used car markets are linked,” said Joe Wiesenfelder, editor-in-chief of Cars.com. “The high prices in one affect the other, and that’s where we are.”

The average amount for a used vehicle has jumped over 21% to about $ 25,400, from $ 20,900 a year ago. For new cars, buyers pay about $ 40,800, up about 4.9% year over year.

“It is difficult to assess how long it will take for things to improve,” Wiesenfelder said. “It all hinges on returning new car inventories to healthier levels.”

Although dealerships don’t offer many discounts or trade as much on prices as they used to, trade-in values ​​for trucks are “through the roof” and car trade-ins are high as well, Barry said. Stoler. , president of the automotive group Len Stoler.

“What [buyers] lose on the discounts they earn on the exchange because those values ​​are so high, ”Stoler said.

Even vehicles with higher mileage can earn more than you might think. The average amount paid for cars with mileage between 100,000 and 109,999 hit $ 16,489 in June, from $ 12,626 a year ago (a 31% jump), according to data from Edmunds.

Trucks topped the list for the largest year-over-year increase in average prices in this high-mileage category. For example, the Chevy Silverado 1500 sold for an average of $ 26,914 in June, a jump of 49% from a year ago.

Even if you think the car you trade in isn’t worth much, it may earn more than you currently imagine in a high price environment. And this is where your negotiation skills can come in handy: You may not be able to lower the price, but you may be asking for more for your trade.

“If you have an exchange, that sweetens the deal,” Drury told Edmunds. “The dealers want this exchange.”

Even 9-year-old cars have average values ​​up about 30% from a year ago, Drury said.

If you are nearing the end of your lease, you may be able to buy it for less than what you would pay for the car if it was currently on a dealership’s lot.

Indeed, the residual value, that is to say the value of the vehicle at the end of the lease, was established when the lease was signed several years ago.

“These leases began before anyone knew there was going to be a pandemic or a chip shortage,” Wiesenfelder told Cars.com. “Chances are, the market will say the vehicle is worth more than it was predetermined.”

If you plan to go this route, make sure you know your state’s sales tax rules that would apply, as it can increase the cost of the buyout, according to Cars.com.