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4 min read. Published September 30 2022
Written by Rebecca Betterton Written by Auto Loans Reporter
Rebecca Betterton is the auto loans reporter for Bankrate. She has a specialization in helping readers with the ins and outs of securely using loans to buy an automobile.
Editor: Rhys Subitch Edited by Auto loans editor
Rhys has been editing and writing for Bankrate since late 2021. They are dedicated to helping readers gain the confidence to take control of their finances through providing precise, well-studied information that breaks down complicated topics into manageable bites.
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A used vehicle comes with a variety of advantages, including a lower rate of depreciation, less expense and a less expensive upfront cost. The current state of the new car market reinforces the final fact that new cars have reached record levels in the last week of summer — making now the perfect time to think about purchasing a used car. The present state of used vehicle market The summer closed out with high costs, with the average vehicle sold for $28,219 in July, and $29,061 during August as per Kelley Blue Book. However, used cars are significantly less expensive than what is offered at new car dealerships. Since the onset of the pandemic, vehicle market has swung dramatically away from normalcy, and has been inching back toward normalcy, but without much success. But it is not all bad news. While we’re still not at 2021’s levels of used price and availability, we are in a great place to purchase used vehicles according to Chris Frey, Cox Automotive’s senior manager for economic and industry insights. Unfortunately, the cost to finance, own and operate vehicles is still experiencing record high prices. These prices imposed by the Federal Reserve make the cost to finance your vehicle higher and fuel prices fluctuate as well. However, financing a used car is still lower than new ones at $515 per month as opposed to $667 in the second quarter of 2022 according to . So, by choosing to use a cheaper, used vehicle you can save money on your monthly payment. Used car prices are cooling, but only slightly In general, used prices are falling according to Henry Hoenig, a data journalist at Jerry however, not much. The Jerry team analyzed the top selling cars in 2022 and compared them to 2021 lightly used models and concluded that “As as of August, just seven out of the 10 vehicles were worth more than used than the cost of the previously owned vehicles.” This indicates that used car prices are still more expensive than they were previously, but are in line with the current market volatility. The inventory of used vehicles is also much larger than it was, because dealers are still playing catch up with supply chain issues. While prices might be more expensive than they’ve always been before, inventory of used cars is greater than that of brand new cars. Inventory for used vehicles has increased by 10 percent to in the year before, according to the third quarter of Cox Automotive’s market research, a positive sign for the coming year. “Prices remain high because there aren’t enough vehicles,” Hoenig says. “It’s crucial to keep in mind that this isn’t like some of the other COVID-related shortages that we have experienced.” While manufacturers of other daily products were able to pick back up quickly, cars are much more difficult to manufacture. It is important to remember that the market for used cars is driven by people who are getting rid of their vehicles which is why when there aren’t enough people buying new cars, there can be a domino effect on used availability down the line. Due to these combined elements, you could find yourself facing increased competition and slightly higher prices for used vehicles, but that doesn’t make buying a second-hand car a bad option. Do I need to buy a used vehicle? The decision to buy an used vehicle comes down to need. There isn’t a perfect solution and there are many macro-environmental impacts increasing costs. Because while experts predict that inventory of new cars will get back to normal by spring 2023, most drivers do not have the luxury of waiting for prices to decline. If you’re planning to buy a vehicle, buying used over new could save you money. The factors that make up high demand for new cars and the lower inventory, coupled with higher interest rates than usual make vehicle costs more expensive in both cases, however buying used is dramatically cheaper. Top 5 questions to ask when buying a used car While comes with a reduced price, it may also bring an additional skepticism that is associated with a vehicle’s history that is not known. To ease these fears make sure you ask the right questions to understand the history of the new car. 1. What is the ownership history of the vehicle? A car with a lot of owners isn’t always good news, but it could mean that the vehicle had serious problems that drivers were trying to avoid fixing or were unable to fix. Ask the dealer about the number of owners it had as well as the length of time each driver had it. Owners who have a short period of time should cause concern. Bankrate tip
You should think about purchasing a vehicle. They must also meet other specifications set by the manufacturer. The manufacturer must also guarantee against any defects in the vehicle.
2. Have you seen the vehicle involved in any crashes? Although you can look up a car’s accident record on sites like Carfax or AutoCheck however, it is recommended to speak with the dealer in advance. Even if the incident was not too serious, it’s important to understand what the procedure was for handling the damage and if you will have to take care of any repercussions when you purchase the vehicle. 3. Are there any maintenance records? Most dealerships that are authorized to sell vehicles have records of maintenance performed on a vehicle, but asking directly can be a good way to gauge the condition of your vehicle. You should avoid buying a vehicle that hasn’t undergone regular maintenance as it could mean higher costs down the road. 4. Do you have a clear car title? A clear vehicle title states that the vehicle does not have any remaining disputes with regard to its ownership, confirming that the vehicle isn’t subject to any restrictions that hinder the sale. If the seller cannot present a clear vehicle title consider this to be an indication of fraud and away from the deal. 5. May I take the car out for a test drive? It is vital to test drive the car before signing on the dotted line, especially when it comes to a used vehicle. Make sure you take your time while test driving and try to be aware of the handling and the condition of the vehicle. This is also a good opportunity to speak in a less intense environment and ask salesperson questions about the vehicle. The next step is to buy used. It’s the best way to get behind the wheel of a fairly new vehicle while still saving money. Although the prices of today might be higher however, purchasing used cars are cheaper than purchasing a brand-new alternative. The key to getting the most efficient used vehicle is making the appropriate inquiries and negotiating the most affordable financing. Learn more
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Authored by Auto Loans Reporter
Rebecca Betterton is the auto loans reporter for Bankrate. She has a specialization in helping readers to navigate the ins and outs of securely using loans to buy an automobile.
Edited by Rhys Subitch Edited by Auto loans editor
Rhys has been editing and writing for Bankrate since late 2021. They are committed to helping readers gain confidence to control their finances by providing precise, well-researched and accurate information that breaks down otherwise complicated topics into bite-sized pieces.
Auto loans editor
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