A used car dealership is seen on May 27, 2021 in Laurel, Maryland, as many car dealerships nationwide are running low on new vehicles as computer chip shortages cause many automakers to nearly cease production .
Jim Watson | AFP | Getty Images
True, the prices of used cars have increased. You may be able to make that work in your favor.
With incredible demand and limited inventory for both new and used autos, you won’t find much room to fluctuate in the prices you see. The good news for consumers is that dealerships are paying more for a used model than you might have sitting in your driveway.
“Many dealers are saying ‘we want used cars,'” said Evan Drury, senior manager of insights at Edmunds.com.
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On-going global shortages of microchips – key components needed to operate today’s autos – have hit manufacturers’ production of new vehicles, which has translated into increased demand. The result is low discounts being offered across the board, some autos selling for more than the sticker price, and expanding demand in the used car market.
“As always, the new car and used car markets are tied,” said Joe Wiesenfelder, executive editor of Cars.com. “High prices in one affect the other, and that’s where we are.”
The average amount for a used vehicle has increased more than 21% to about $25,400 from $20,900 a year ago. For new cars, buyers are paying about $40,800, up about 4.9% year over year.
“It’s hard to predict how long it will take for things to improve,” Wiesenfelder said. “It all depends on the new-car inventory returning to healthy levels.”
your trade-in. take advantage of
Barry Stoller said, although dealerships aren’t offering as much of a discount or negotiating prices as before, trade-in values for trucks are “through the roof” and car trade-ins are even higher. , said Barry Stoller, president of Lane Stoller Automotive Group.
“What [buyers] They lose out on trade-in discounts because those values are so high,” Stoller said.
Even vehicles with higher mileage can get more than you think. According to data from Edmunds, the average amount paid for autos with mileage between 100,000 and 109,999 in June was $16,489, compared to $12,626 a year ago (a jump of 31%).
Trucks top the list of the biggest year-over-year increases in average prices in that high-mileage category. For example, the Chevy Silverado 1500 sold for an average of $26,914 in June, up 49% from a year earlier.
Even if you don’t think the car you’re trading in is worth much, it may yield higher than you expect in the midst of higher prices. And that’s where your negotiating skills can come in handy: You may not be able to lower the price, but it’s possible that you can put more pressure on your trade-in.
“If you have a trade-in, it makes the deal sweeter,” said Durie at Edmonds. “Dealers want trade-ins.”
Even 9-year-old cars have an average price of about 30% higher than a year ago, Durie said.
Consider Lease Buyout
If you are nearing the end of your lease, you may be able to buy it for less than what you would pay for the car if it is currently sitting on the dealer’s lot.
This is because the residual value — the value of the vehicle at the end of the lease — was established when you signed the lease several years ago.
“Before those leases started nobody knew there would be a pandemic or a chip shortage,” said Wiesenfelder on Cars.com. “There’s a good chance the market says the vehicle is worth more than it was predetermined.”
If you consider going this route, be sure to know your state’s sales-tax regulations that will apply, because according to Cars.com, this can add to the cost of the purchase.