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Why now is a good time to buy a used car

Prices have dropped since last year. Will waiting save you even more?

By Credit.com Nov 18, 2013 1:19PM
This post comes from Christine DiGangi at partner site Credit.com.

 

Credit.com on MSN MoneyPrices 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 Couple shopping for car © Image100, Jupiterimagesquarter 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.


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84Comments
Nov 18, 2013 3:16PM
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It still comes down to that if you do not need to buy another car then do not. Each month the savings will rack up because you are not making that car payment.
Nov 20, 2013 1:41AM
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Dave 1230, buying a new car, ( unless you just love the smell),
is wrong, wrong, wrong...you will always save money, buying (smart) used ..
The purchase price alone, will save  you 15%,  off the top.
and trust me, a car with 12-15,000 miles is nothing, that said, bottom line.
You need to drive a car, 2 years with NO payments, to break even. So Buy used, pay it off 3 years,
drive it another 2 years before you dip you feet in the water again. But if you are really smart, 
take care of your car and drive it for 7-9 years. trust me, a good car will last 150,000 miles easy..
Nov 18, 2013 5:18PM
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In this economy, who can afford a new car that has a sticker price closer to the price of the house I bought 12 years ago. My english teacher would kill me for the run-on sentence.
Nov 24, 2013 6:25AM
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I will just buy the car outright!! no payments, don't have to have a Mercedes ya know!!
Nov 18, 2013 5:27PM
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Extended terms on financing, even on used cars, make new or late model buys possible. The problem is that those thousand dollar cars (20 years ago hundred dollar cars) are disappearing.
Nov 20, 2013 8:19PM
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Don't buy a new car unless you really enjoy breathing formaldehyde and other toxic chemicals. Washington has weakened consumer protection  since Clinton opened the door to China and others with WTO  act. This permits the importation of highly toxic products and chemicals for use here in the US for use in carpets, plastics, rubber, dry cleaning, laundry products, building products, paints and finishes, etc.. I am so sick of the smell and effects the stuff has on me. I have a 2011 Toyota Tundra Platinum with all of the bells and whistles, my dream truck and I hate to drive it, after a lifetime in the construction business I have developed a low tolerance for chemicals and this truck is full of them. Some of the effects I suffer are burning in my eyes, throat, lungs and nose, horrible headaches, shortness of breath and just basic "can't stand the stink, you smell like it when you leave the vehicle". The truck is in perfect condition with only 18,500 miles on it. I have made up my mind to sell it and buy a 2000 f-250 cash and forget about new cars. I am a good mechanic having grown up poor and had to fix my own rides ($100.00 specials) so its cool, I have a shop and tools.
Nov 24, 2013 9:14AM
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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.

Nov 24, 2013 4:38AM
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you buy a new car, the second you sign the purchase agreement, you've lost thousands in depreciation....  not very smart.  a used car, however, has already depreciated and so you don't incur as much of this loss in value.  just do your homework because there are many used cars that were from the hurricane in New Orleans, have been wrecked, odometer turned back, and so on....  get someone you trust to do a pre-buy inspection.
Nov 24, 2013 11:40AM
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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.

Nov 19, 2013 5:36AM
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It is never a good time to buy a used CAR that cost this much on Average. Better to buy a old Clunker for peanuts and wait until you have enough for a New Car. Then maintain the heck out of your new Car so you can have it for 20 years or more.
Nov 18, 2013 3:39PM
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Bought my daughter a $3500 car over 6 yrs ago. Put brakes tires etc.  Had to put  a used motor in 2 yrs ago. 1k total and all is good. She graduates college this spring.  1k per yr for a college kid having a car is the way to go when you look at how much college costs.  Never buy a new car unless you have 1 million dollars in the bank!!!!!!
Nov 24, 2013 11:08AM
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Americans aren't smart enough to help themselves.  Whatever the marketing machine tells them to do, is what they will mindlessly do (women are especially helpless when it comes to marketing/ads).  You should buy a car that you can afford (this means not taking out loans and paying cash).  Americans want to pretend they are rich or keep up with the Jones, so they keep buying new cars every three or so years (people will put themselves under great financial strain doing this, but you cannot tell them otherwise).
Nov 24, 2013 11:52AM
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The best way to get back on your feet is to miss three car payments BYE
Nov 24, 2013 2:52PM
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I have bought new, used and auction vehicles  I have driven vehicles for 65,000 miles and got rid of them and I have driven vehicles for 165,000 miles before getting rid of them.  In the process I have found out one sure thing, if you get a good one, you have a good one.  If you buy a bad one, you have a bad one.  One nearly new vehicle  I owned, started out good and went way bad.  Before we finally gave it up, between the dealer warranty work and my own investment, the vehicle cost twice a much as a new one.  Never again!!!  Current vehicle was bought new,  after the last one I talked about.  It is 8 years old, has a 110,000 miles on it and runs like new.  Also bought a couple vehicles privately and at auction for $500 - $1,300.  Have had the 22-year-old, $500 vehicle for a couple years.  It has 180,000 miles on it.  We stuck about $750 in new tires and used parts and the vehicle starts and runs like a top.  My wife used it as a work car, and running errands.  We've driven that car 4-5 days a week and fill gas about every 4-5 weeks.   That's a month or two of payments on a new vehicle.  No need for collision/comprehensive insurance on it so we save there too.  The $1,300 vehicle is 9 years old.  Bought it at auction.  It has less than 65,000 miles on it.  We have stuck a couple hundred dollars into minor repairs and it too needs no collision/comp insurance.  Unless you are a new/recent used fanatic, you can get reliable transportation cheap that will get you where you are going and get good gas mileage too.  Whatever your preference, good luck!!!!
Nov 24, 2013 2:45PM
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The only way you're going to make a new car 'pay off'  is to make it a long run purchase.  Hold it for 15 years,  and you've got your use out of it.
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.

Nov 24, 2013 8:26AM
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Wouldn't the price of a car that had been "held on to longer" be worth less at trade now than at any time in the past few years, and a "more" used car would also sell for less than those that were not "held onto" as long prior to the financial crisis? Age and use must be factored in. Chances are that if I were to purchase a used car now, the inventory would have an older average age and mileage of inventory would be higher. So that would be a better deal for me? How? The "reduced" cost probably doesn't fully reflect the additional use and age of todays auto inventory.  
Nov 24, 2013 6:22PM
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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.

Nov 24, 2013 3:01PM
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unfortunately the days of cheap 1-2 year old, low miles used cars are gone, at least for now.
I seem to recall that in the late 90s there was a glut of really nice used cars because business was a-boomin' and corporate fleets could afford to swap cars early and often.

Now, at least when I browse the websites of local dealers, I see that the 1-2 year old cars with low miles cost nearly as much as the brand new ones (usually the new car rebate + lower interest rate offset the difference).
Used cars where the price drops off significantly are pretty depressing, at least 4 years old and high miles, higher than what even the best extended warranty covers.

Maybe (hopefully) when businesses can one again show off for the world by buying a new car every year or two, we will once again see a glut of well maintained 1-2 year old cars in the dealer's lots
Nov 24, 2013 6:42PM
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I have driven 2 million miles so far. I have always bought used and maintained them well. Every car went at least 200,000 miles and some 300,000. My 06 Nissan Altima, that I have now, I bought for $7900. It has 274,000 on it at this time and costs me about $1000 a year in maintenance. It is nice to not have car payments. I don't buy clunkers, just 3-4 year old lease cars.
Nov 24, 2013 9:27PM
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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).

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