Consumers pay an average of $10,000 more than “normal” prices for used cars
jim watson | AFP | Getty Images
It’s no secret that used car prices have skyrocketed over the past two years in an industry rocked by supply chain issues and dwindling new car inventories.
But how much more do consumers pay? An average of $10,046 more — 43% — than if typical depreciation expectations were in play, according to a June 30 price snapshot in the “Back to Normal” index published by CoPilot, a shopping app of cars.
The average price of a used vehicle is $33,341, a 0.5% increase from May and just $172 less than the March peak, according to CoPilot research. If the depreciation predictions had proven true, the average price would be $23,295, according to CoPilot’s index.
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“Despite signs of a slowing economy, rising interest rates and high fuel prices, the used car market is holding up,” said CoPilot CEO and Founder Pat Ryan. .
Consumer purchases remain strong, at least in part due to indirect demand from the new car market. Supply chain issues — primarily an ongoing shortage of computer chips — have left dealerships with fewer new vehicles to sell.
It’s a ‘long road back to normal’
The amount consumers pay above normal also depends on the age of the car. Almost new vehicles (1 to 3 years old) have an average listing price of $42,314, which is $13,145 more (45%) than the normal projected amount of $29,169, according to the CoPilot index.
In contrast, vehicles 8-13 years old cost an average of $18,038, or $5,416 more (43%) than the previously forecast $12,622. This category is the only age group whose average price has been on a downward trend for several months.
“Although some segments are showing initial signs of slowing down, the used car market as a whole still has a long way to go to get back to normal,” Ryan said. “Despite a number of challenges facing the overall economy, the market has not eased to the degree one might have expected.”
How to get the best price on a new or used vehicle
For buyers, having a trade-in is their best bet to lower the price of a car – new or used. Average trade-in capital is estimated at $10,381, up 49.2% from a year ago and the first time above $10,000, according to a joint forecast by JD Power and LMC Automotive .
Nevertheless, be prepared for large monthly payments: they average $678 over 70.3 months (a few months before six years) for new cars and $555 over 70.8 months for old vehicles. occasion, according to the most recent data from Edmunds.com. Interest rates have also increased and now average 5% for new car loans and 8.2% if you are borrowing to buy a used vehicle.
If you’re considering buying a new (or used) vehicle, here are some tips from Edmunds:
- Know your trade-in value. The added equity of an exchange is your greatest trading tool in today’s market.
- Know your pre-approved interest rate (i.e. from a credit union or bank). Even if you have great credit, it’s good to get pre-approved for a loan and know what interest rate you qualify for – which helps determine how much car you can actually afford – and then see if a dealership will match or beat the rate you may be getting elsewhere.
- Know your overall budget. With prices and interest rates on the rise, you may not be able to afford to buy as many cars as you think. Consider costs other than monthly payments, including depreciation, taxes, fees, fuel, maintenance and repairs.