- Used car prices are improving, but they are still astronomically higher than they were before the pandemic.
- Just five years ago, about 60% of used cars were under $20,000. Now it’s down to about 30%.
- This means that a car buyer’s $20,000 budget isn’t too far off today.
If you’re in the used car market with a budget of $20,000 or less, it may be harder to find a used car today than it was five years ago.
In the first quarter of this year, only 30.6% of used cars sold for less than $20,000, according to the company. Analysis from car buying resource Edmunds. In 2018, double that, or 60.5% of used cars, would have been under $20,000.
It doesn’t get any better than looking at the average price of a used car. The average used car price last quarter was $28,381 for him.
That’s an improvement from the average used price of $30,329 just one year ago, but a significant increase from the pre-pandemic average used price of $19,657 in 2018. edmunds.
This data is just the latest indicator of the many challenges in today’s car-buying market that will ultimately crush many car buyers’ hopes of finding a cheap “starter car.” .
So why are used car prices so high?
Supply shortages due to the pandemic have affected both the new and used car markets. Both have increased in price due to low inventory and fewer options available. Those who were able to buy a new or used car may have paid a lot of money for something that may not have been what they wanted.
Prices may be slowing down right now, but the second-hand market in particular is still in big swings.
People generally keep their cars longer because of persistently high prices, lack of inventory, and ever-improving car quality.
Many drivers buy out leases instead of returning their cars, or simply lease less frequently. As a result, the volume of distribution from leasing to the second-hand market has decreased significantly.
In addition, new cars are generally more expensive in the used car market.
All three of these factors limit the variety and availability of used vehicles. That will affect the persistent constraints on supply and demand, and prices will continue to rise.
Edmunds found, for example, that a 2018 Toyota Camry with an average mileage of 60,565 miles sold for $21,223 in the first quarter. Just three years ago, the mileage he had was 26,288 miles and the average price he was $19,656. This indicates that older cars with higher mileage may now be paying more.
What can buyers do?
Due to the lack of younger, out-of-lease and low-mileage cars on the used car market, buyers may generally need to choose from older, higher-mileage used cars if they want to stick to lower prices. there is. The budget is $20,000.
Edmunds experts advise customers to know their trade-in value. Values have fallen, as have prices, but certain used cars may still be in high demand. Hunting for pre-approved loans is another way to navigate the market. Finally, flexibility is key. As during the pandemic, buyers may not be able to find exactly what they are looking for at the price they are aiming for.
One thing that might be surprising but worth noting is the price of new cars.
Ivan Drury, Director of Insights at Edmunds, said in a release: “If new car sales stagnate, automakers and dealers may use heavier incentives to entice consumers into new purchases, resulting in will put downward pressure on used car values.” ”
