A used car dealership in Laurel, Maryland is seen on May 27, 2021 as many car dealerships across the country drop in new cars as a shortage of computer chips nearly halts production at many auto manufacturers.
Jim Watson | AFP | Getty Images
It is true that the prices of used cars have gone up. You may be able to make that work for you.
With constant demand and limited stock for both new and used cars, you won’t find much wiggle room in the prices you see. But the good news for consumers is that dealerships pay more for used models—which may be sitting in your driveway.
“A lot of dealers say ‘we want used cars,'” said Evan Drury, senior director of insights at Edmunds.com.
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The persistent global shortage of microchips – the key components needed to power cars today – has affected the production of new car manufacturers, which has translated into increased demand for supply. The result has been lower discounts across the board, with some cars selling for more than their sticker price, and demand spilling over into the used car market.
“As always, the markets for new cars and used cars are interconnected,” said Joe Weisenfelder, Executive Editor of Cars.com. “High prices in one affect the other, and that’s where we are.”
The average amount for a used car jumped more than 21% to about $25,400 from $20,900 a year ago. For new cars, buyers pay nearly $40,800, up about 4.9% year over year.
“It’s hard to gauge how long it will take for things to get better,” Wiesenfelder said. “It all depends on new car stocks coming back to healthy levels.”
Benefit from your exchange
While dealers don’t offer as much in the way of discounts or bargaining prices as they once had, swap values for trucks are “high” and auto swaps are also high, said Barry Stoller, president of Lynne Stoller Automotive Group.
“what or what [buyers] They lose on the discounts they earn in trade, because these values are too high.”
Even vehicles with higher mileage may bring in more than you think. The average amount paid for cars with a length of between 100,000 and 10,999 in June, compared to $12,626 a year earlier (a 31% jump), according to data from Edmunds.
Trucks topped the list for the largest annual increase in average prices in that high mileage category. For example, the Chevy Silverado 1500 sold for an average of $26,914 in June, a 49% increase from last year.
Even if you don’t think the car you’re trading is worth much, you may be making more returns than you expect right now amid rising prices. And this is where your negotiating skills can come in handy: you may not be able to lower the price, but you can pay to get more for a trade-in.
“If you have a trade-off, that improves the deal,” Edmonds’ Drury said. “Traders want that barter.”
Drury said that even 9-year-old cars have average values about 30% more than last year.
Consider buying a lease
If you’re nearing the end of your lease, you may be able to buy it for less than you would have paid for the car if it was sitting on a dealer’s plot at the moment.
This is because the residual value – the value of the car at the end of the lease – was determined when you signed the lease several years ago.
“These rentals started before anyone knew there was going to be a pandemic or chip shortage,” Wiesenfelder said at Cars.com. “There’s a good chance the market will say the car is worth more than what was predetermined.”
If you’re considering going this route, make sure you know the sales tax rules in your state that will apply, as this can add to the cost of the acquisition, according to Cars.com.