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Is now a good time to buy a used car? Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to help you make smarter financial decisions by offering interactive financial calculators and tools, publishing original and objective content, by enabling you to conduct research and analyze data for free and help you make informed financial decisions. Bankrate has partnerships with issuers including, but not restricted to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make money The products that appear on this site come from companies who pay us. This compensation could affect how and where products appear on the site, such as such things as the sequence in which they appear in the listing categories, except where prohibited by law for our mortgage home equity, mortgage and other products for home loans. However, this compensation will not influence the information we publish, or the reviews that you see on this site. We do not cover the entire universe of businesses or financial offerings that could be accessible to you.
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4 min read. Published September 30, 2022
Authored by Rebecca Betterton Written by Auto Loans Reporter
Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers to navigate the ways and pitfalls of borrowing money to purchase an automobile.
The edit was done by Rhys Subitch Edited by Auto loans editor
Rhys has been editing and writing for Bankrate since late 2021. They are dedicated to helping readers gain the confidence to take control of their finances with clear, well-researched information that breaks down otherwise complex topics into manageable bites.
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Buying a comes with many advantages, including a lower rate of depreciation, less expense and a less expensive upfront cost. The present state of the new car market is a further proof of the previous point — new vehicles have reached record levels in the last week of summer. This makes now the perfect time to think about buying a second-hand car. The current state in the market for used cars The summer ended with high prices. The average used vehicle was sold for $28,219 during July, and the $28,061 mark in August as per Kelley Blue Book. But used vehicles are still dramatically less expensive than what is sold on new car dealer lots. Since the beginning of the pandemic, the vehicle market has swung dramatically away from normalcy and is slowly creeping back towards normalcy without much progress. However, it’s not all negative. Although we’re not yet at 2021 levels of used prices and availability however, we are in a favorable spot to buy used, encourages Chris Frey, Cox Automotive’s senior manager for economic and industry research. However, the cost to finance, own and maintain vehicles is at record levels. The Federal Reserve make the cost to finance your car more expensive and gas prices are fluctuating as well. However, financing a used car is still less than for new ones at $515 per month as opposed to 667 for the 2nd quarter in 2022, according to . If you choose to purchase buy a used, less costly vehicle you can save money on your monthly payment. Prices for used cars are cooling, but only slightly overall, prices for used cars are dropping as per Henry Hoenig, a data journalist for Jerry however, not by much. The Jerry team reviewed the best selling vehicles in 2022 and compared them to models that are lightly used in 2021 and found that “As of August, only seven out of the 10 cars were worth more than used than the cost of the previously owned cars.” This implies that the prices of used cars are more expensive than they were in the past, but they are on par with the current market volatility. The used car inventory is also much larger than it was, because dealers remain in a state of catching up with supply chain issues. While prices might be higher than they have previously been, inventory of used cars is greater than those of new cars. Inventory for used vehicles has increased by 10 percent to the same time last year, according to Cox Automotive’s 3rd quarter market research which is a good sign for the coming year. “Prices remain high due to the fact that there aren’t enough vehicles,” Hoenig says. “It’s crucial to keep in mind that this isn’t the same as COVID-related shortages like we have experienced.” While the makers of other daily products were able pick up fairly quickly, cars can be more difficult to produce. It’s important to be aware that the market for used cars is driven by people who are quitting their cars which is why if there aren’t as many drivers buying new it could have an effect that will affect used car availability later on. Due to these two elements, you could be met with more competition and slightly higher prices for used vehicles however that doesn’t mean buying a second-hand car an unwise choice. Do I need to buy a used vehicle? The issue of purchasing an used vehicle comes down to need. There isn’t a perfect solution , especially with numerous macro-environmental factors that are increasing the costs. While experts say that inventory of new cars will return to normal by spring 2023, most motorists don’t have the luxury to wait for prices to decline. If you are looking to purchase a car buying used over new can result in savings. The factors that make up high new vehicle demand and limited inventory and higher interest rates than usual can make the cost of a vehicle more expensive either way, but buying used is considerably cheaper. The top five questions to ask when buying a secondhand vehicle. While it comes with a lower , it can carry additional fear that comes with an unknown vehicle’s past. To mitigate these feelings, ask the right questions to gain an understanding of the background of your potential new car. 1. What is the owner’s history of the vehicle? A vehicle with many owners is not necessarily negative, but it could indicate that the car had major issues that the owners were trying to avoid fixing — or could not fix. Ask the dealer about the number of owners the vehicle had, along with the amount of time each owner was in it. A lot of owners with short spans of time can be cause for anxiety. Bankrate tip
You should think about purchasing a vehicle. These vehicles must meet additional requirements created by the manufacturer. The manufacturer must also guarantee against any defect in the vehicle.
2. Have you seen the vehicle involved in any crashes? Although you can check a vehicle’s accident history on websites like Carfax or AutoCheck but it is better to inquire with the dealer prior to purchase. Even if the collision was not too serious, it’s important to find out how the damage was handled and whether you’ll need to face any consequences in the course of ownership. 3. Do I have access to the maintenance documents? Most dealerships that are authorized to sell vehicles keep records of any maintenance done on the vehicle, however having a conversation with the dealership directly is an excellent way to assess the condition of your vehicle. It is best to avoid purchasing the vehicle that isn’t subject to regular maintenance because it could cause higher expenses down the road. 4. Is there a clear vehicle title? A clear vehicle title states that the vehicle does not have any remaining disputes with regard to its ownership and also confirms that the car does not carry any restrictions that hinder the sale. If the seller cannot present a clear vehicle title consider this to be a red flag and walk away from the transaction. 5. Can I take the vehicle out for a test drive? It is essential to test drive the car prior to signing on the dotted line particularly when you are purchasing an older car. Be patient when driving and try to get a feel for the driving experience and the condition of the car. This is also a great opportunity to speak in a more relaxed environment and ask the salesperson any questions about the vehicle. Following steps: Buying used is a great opportunity to take the steering wheel of a relatively new car and still save money. While the prices of today might be higher, buying used is still less expensive than buying a brand new option. The trick to getting the most affordable used vehicle is asking the right questions, and to get the best financing deal. Find out more
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Written by Auto Loans Reporter
Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers to navigate the details of borrowing money to purchase the car they want.
The edit was done by Rhys Subitch Edited by Auto loans editor
Rhys has been writing and editing for Bankrate since the end of 2021. They are passionate about helping readers gain confidence to control their finances through providing precise, well-researched and accurate information that breaks down otherwise complicated subjects into digestible pieces.
Auto loans editor
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