Write About Everything

Our top picks

Top Picks

Tips and guides

Guides

Calculators

Tools

My NerdWallet

Used Car Prices are dropping: What That Means for Car Buyers

Advertiser disclosure You’re our first priority. Everytime. We believe that every person should be able make financial decisions with confidence. While our website doesn’t feature every company or financial product that is available in the marketplace however, we’re confident that the advice we provide and the information we offer and the tools we create are impartial, independent easy to use and completely free. How do we earn money? Our partners pay us. This could influence the types of products we write about (and where those products appear on our site) However, it in no way affects our advice or suggestions, which are grounded in many hours of study. Our partners cannot pay us to guarantee favorable review of their services or products. .

Used Car Prices are Dropping What Does This Mean for Car Buyers

Used car prices saw a massive decline in December, but buying a car now can still be expensive for certain buyers.

by Whitney Vandiver Writer | Car ownership, car maintenance Whitney Vandiver writes for NerdWallet about how car owners can reduce the cost of ownership and maintenance. She was previously a writer in the oil and gas industry where she was recognized in national newspapers as well as international magazines. Whitney began writing out of enjoyment and finds stories that highlight or help those in the LGBTQ+ community the most satisfying to create. In her spare time, she loves walking and reading with her Irish wolfhound. Her home is in Houston.

Feb 1 Feb 2023

Written by Julie Myhre-Nunes,, Assistant Assigning Editor Auto loans, consumer credit Julie Myhre-Nunes works as an assistant editor assigned to NerdWallet. She has worked in the field of personal finance for more than 10 years. Before joining NerdWallet, Julie oversaw editorial teams at NextAdvisor, Red Ventures and Quote.com. Her personal finance insight has been highlighted on Forbes, The Boston Globe and CNBC over the years. Julie’s articles have been published in USA Today, Business Insider and Wired Insights, among others. Email: .

Many or all of the products featured here come from our partners who compensate us. This affects the products we write about and where and how the product is displayed on the page. However, this doesn’t influence our opinions. Our opinions are entirely our own. Here is a list of and .

Following more than one decade of prices that were too high the used car market was cooled by a few degree in the month of December.

The new trend offers some relief to those who buy cars. However, inventories have not yet reach pre-pandemic levels, and consumers are still unable to enjoy the purchasing power they had in 2019.

Although experts predict that the used car market in this year’s forecast will continue to improve Consumers must have realistic expectations of what car buying will look like in 2023.

December saw a record drop in used-car prices

According to a report from January 2023 by CoPilot which is a personal app to help you buy a car, used-car prices decreased in December for the sixth straight month, dropping 8.8 percent from January 2022. For a better understanding this was the biggest annual drop the used car market has experienced since the end in the Great Recession in June 2009.

But they’ve got a way to go before they’re in a familiar space The average used car cost was 30.1 percent higher than a market-rate average.

Markets are experiencing “more of a gradual recovery than what you would call traditionally declining,” says Joseph Yoon, consumer insights analyst at Edmunds, an online guide to cars. “The prices are still very high, extremely, and very higher.”

Interest rates still hamper used-car affordability

One influence on used-car prices is the Federal Reserve’s aggressive interest rate hikes in response to rising inflation.

According to Edmunds, the average cost of a used-car loan was up from 8.76 percent in July, to 10.25 percent in December. As loan rates rise people who finance vehicle purchases will be paying more for the car, even with lower price of the sticker.

What this means for car buyers

Consumers who plan to purchase a second-hand car in the coming year may be pleased to see lower windshield prices but they’ll still must navigate a crowded car market. Prospective buyers need to anticipate various trends when looking for a used car this year.

Lower prices than 2022

As demand for used cars decreases, prices will remain in decline. According to J.P. Morgan Research, prices for used cars could decrease by 10 percent to 20% by 2023. In the event that the Fed continues to increase interest rates, vehicle prices will likely keep their downward trend.

However, not all models will be priced at the same time. Smaller cars and pick-ups have seen the smallest change in cost since January 2022, according to Cox Automotive, an auto company that collects data — while luxury cars and SUVs have seen the largest price drops.

Continuation of higher-than-normal ownership cost

With the price of used cars dropping making it more attractive to potential buyers the increase in interest rates means that consumers who require financing for their purchases will continue to feel the pressures from the market that is soaring.

Car buyers who take advantage of lower prices and finance purchases amid increased interest rates could pay more for their car during the term of a loan. In addition to a higher monthly installment, they may be faced with negative equity in the future and end up .

Variable trade-in value fluctuations

According to J.D. Power the data and research firm, trade-in vehicles in December received an average value of just $786 in value for trade-ins than the vehicles that were traded in June. Since dealerships are expected to earn less from used car sales, trade-in values will continue to decrease in comparison to the prior year.

Car owners looking to sell their current models should anticipate lower prices than those available in the previous year.

“It’s likely to result in a significant reduction of what you’ll receive from the value of your trade-in when you were in search of an automobile in September,” states Terrance Gandy, the used-car sales manager for Route 44 Toyota in Raynham, Massachusetts.

Affluent, but relatively low inventory levels

While automakers are working toward production levels that are pre-pandemic and used cars are becoming more affordable, consumer need for cars is expected to be strong following the shortage of vehicles in previous years, according to J.D. Power. This could reduce the available stock of used vehicles since more buyers are likely to purchase vehicles after waiting for used car prices to drop, which peaked in September.

“Even the prices do go downwards,” says Yoon, “for the foreseeable future, we’re going to be millions of vehicles short on used car inventory.”

However, it will let certain consumers to be in a stronger position when bargaining trade-in offers.

“They have a better chance of getting a deal right now because dealers have to get these [new] vehicles off their lot,” says Gandy. “The ball is kind of in your hands if do decide to trade-in your vehicle since dealers are in need of your vehicle.”

About the writer: Whitney Vandiver is a writer for NerdWallet currently focusing on car ownership and maintenance. She has previously written about payments for small businesses and payment.

In a similar vein…

Dive even deeper in Auto Loans

Learn more about smart money strategies right to your inbox

Sign up and we’ll send you Nerdy posts on the financial topics which matter to you the most as well as other strategies to help you get more from your money.

Make all the right money moves

Banking Credit Cards Financial Planning Finance News Insurance Investing Loans Mortgages Small Business Taxes Travel

about

Help

legal

Download the app

Note: NerdWallet strives to keep its information accurate and up to date. It is possible that the information presented may differ from what you will see when you go to a financial institution or service provider’s site or a the website of a specific product. All items in the financial market, such as shopping products and services are provided without warranty. Before evaluating offers, review the financial institution’s Terms and Conditions. Pre-qualified offers are not binding. If you notice discrepancies on your credit score, or any other information from your credit report or credit report, you should call TransUnion(r) immediately. NerdWallet Compare, Inc. NMLS ID# 1617539 California: California Finance Lender loans made pursuant to Department of Financial Protection and Innovation Finance Lenders License #60DBO-74812 Property and Casualty insurance services provided by NerdWallet Insurance Services, Inc. (CA resident license number. OK92033) NerdWallet(tm) | 55 Hawthorne St. – 11th Floor, San Francisco, CA 94105

NerdWallet USA

|

|

|

|

(c) (c) 2023 NerdWallet, Inc. All Rights Reserved.

If you loved this write-up and you would like to get more info concerning $255 Payday Loans Online Same Day (loanwq.site) kindly see our own internet site.