Cost of used cars going down while while new car prices keep climbing
After rising to record levels, used car prices are starting to fall.
They dropped 4.3% in September according to the Consumer Price Index, South Region report. That dip was by far the biggest change of 2022.
This price drop is enough to cover the rise in interest rates this year.
In December of 2021, if you bought a $20,000 car, putting $2,000 down and using the 36-month loan rate of 4.39%, you’d pay $22,944.
Punch the current loan rate of 5.87% into that equation and you’ll pay $23,375, that’s $431 more than if you bought in December.
But knock 4.3% off the cost of a $20,000 car and you save $860.
However, that price drop is an average and there are still cars with certain qualities that will be more expensive.
"Typical of this time of year, they’re dropping," auto dealer John Hiester said about used car prices. "I’d say they’re dropping a little faster now."
Hiester says low-mileage vehicles are the exception. "[They] are still worth a premium," he told 5 On Your Side.
That’s because new car prices keep climbing.
"With the shortage of new cars, people that have low-mileage vehicles aren’t trading them in because they can’t get a new vehicle," Hiester explained.
If you’re wondering when to buy, Chris Frey tracks the wholesale price of used cars and doesn’t expect prices to shoot back up, or fall dramatically, any time soon.
"It’s not like catching a falling knife, you’re not going to buy and then regret it six weeks later or two months later. Just do a little bit of homework and pull the trigger," Frey said.
A couple other things to know if you’re car shopping:
- The better the car is on gas, the smaller price drop you’re likely to see.
- If you want an electric vehicle and can wait a little bit, there’s a new tax credit on used electric vehicles starting in 2023 worth up to $4,000.
