Why now is a good time to buy a used car
Prices have dropped since last year. Will waiting save you even more?
Prices for used cars are at a four-year low, and poised to drop even lower, car experts say. The reason: Americans are finally buying new cars, and their trade-ins are adding supply to what had been a tight market.
The average price of a used car dropped 2.8% in the third quarter to $15,678 from $16,134 the quarter before, according to the used-car market report from car-comparison site Edmunds.com.
The last time the third-quarter average was this low was in 2009, when the price was $14,808. The average used-car price has been higher than $15,000 since the end of that year.
After the financial crisis, Americans pulled back on trading in their cars, so while the demand for used cars was high, the supply was not. This drove up the prices, pushing some would-be used-car buyers to buy new, because the difference in price was smaller than normal. Used-car prices peaked in the second quarter of 2011 at $16,473.
"Now that the new car market has hit its stride, buyers are no longer drawn to used cars the way they have been in recent years," said Joe Spina, Edmunds.com’s director of used car analysis, in a news release about the report. "Used car prices will likely continue to decline in the coming months simply because there will be more of these vehicles sitting on dealer lots."
Volvo, GMC and Chevrolet vehicles sat in dealers’ lots longer than other brands in the third quarter, and shoppers may see lower prices for those makes. Conversely, Honda, Toyota and Lexus vehicles were the most popular.
If you have a low credit score, used vehicles may be the way to go when it’s time to purchase a car. It's easier to qualify for used-car financing, and while lenders have slightly lowered their standards for financing during the past few months, it's smart to go into the shopping process with an idea of where your credit stands. You can check your credit scores using a free online tool, such as Credit Report Card, which gives you a monthly credit snapshot.
More from Credit.com
- Are there car loans for people with bad credit?
- What to do if you can't make your car payments
- The 5 worst car-buying mistakes
Buy new if you keep your cars for 10 years and greater than 100,000 miles. Last truck I bought had a $45k sticker and made the deal at $34K. I saw 2 year old used ones at other dealers, of the same model, asking over $30k. 0% financing for the new verses 5% on the used saved thousands.
If you got the money and your going to keep the car a long time, buy new.
I don't necessarily agree with buying used, at least for the kind of cars I buy....midsize american/japanese/korean cars.
For example, this spring I bought a new Chevy Cruze Eco model new. MSRP was around $21,200. The dealer had a whole bunch on close out after rebates that I could use, priced at $16,800. In addition I have the GM credit card and had accumulated around $3,600 more in cash rebates that I applied to the purchase. Net cost of the car before sales tax was around $13,200 to me.
Now how could I have ever matched that value in a similiar used car? I don't think ever. Now that is probably the best new car value I have ever bought, but I keep cars 10+ years, take care of them.
But on the other hand, you would still be about 40% better off if you did the same thing by buying a 3-4 year old car and held it 11-12 years.
At some point in the future, new cars will be energy efficient enough to justify their initial purchase price. Maybe that will happen when we get the money and corruption out of government. Meanwhile we are all slaves to one corporation or another, mostly oil.
You can do a lot of damage to a car in 2 years, it depends on who drives and who maintains the vehicle. I can destroy any car made in no time at all if I drive it like a punk, doesn't matter who makes it.
Think about the car that accelerates at full throttle to the next stop light. The one that has to be right behind you in traffic, speeding up and braking hard. The car that pulls all the way up until it hits curb in the parking stall and then jams it in park. The driver that turns the wheel all the way and holds it hard against the stops in a pathetic attempt to park, only to fail and try it repeatedly over and over. The car that bottoms out because they drive to fast over a bump or railroad tracks. Do we have to mention the curb check. The wanna be race car drivers, the bump and run drivers, the "all original" even the oil, driving on underinflated tires, riding the brakes, or just a normally driver that spends a lot of time in stop and go traffic.
I don't want that car, do you? Of course not. You take a chance buying used, you might still come out ahead if it needs new components, but you might be in for trouble. On second thought with the new order of things even new cars are probable going to give you trouble, better restore a classic.
One other thing, never buy a used Ford from a Chevy dealer, or a used Chevy from a Ford dealer. You know why.
Why to buy a NEW car:
1) Lower interest rates
2) Longer terms
3) Full warranty
4) Vehicle history known (not buying "someone else's problems")
5) Latest technology
Maintain your new vehicle and it will last you twelve + years easily. I'm 53, and have only purchased three new cars so far in my lifetime for a grand total of $50,000.00 (not counting general maintenance).
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
ABOUT SMART SPENDING
LATEST BLOG POSTS
Occupy Wall Street bought and forgave the student loan debt of more than 2,700 Everest College students.
VIDEO ON MSN MONEY
BLOGS WE LIKE
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'