What’s Behind Rising Used-Car Prices?
Everyone knows a vehicle’s value drops once it leaves the auto lot, right? Not so, says SmartMoney in a post on rising used-car prices—at least not today.
Everyone knows a vehicle’s value drops once it leaves the auto lot, right? Not so, says SmartMoney in a post on rising used-car prices—at least not today. It turns out used vehicles have stopped losing value, and in some cases are worth more now than they were just a year ago. In “How to Cash In on Rising Used-Car Prices,” SmartMoney outlines 3 theories that may explain why used-car owners are now in the drivers’ seat.
RVI Group’s Used Car Price Index, which compares existing used cars to the same used models that were sold in previous years (with similar mileage), indicates that in April 2011 used-car values leapt 16 percent. For example, a 2008 Ford Focus S sedan with 35,000 miles would have sold for $7,525 in May 2010, while today’s seller could realistically anticipate roughly $9,600. Experts cite limited supply as one reason for the price jump. The economic crisis saw a dip in new car sales. That, combined with the fact that many people opted to keep driving their vehicles, means there’s fewer used cars to sell.
People looking to sell their used vehicles are now apt to find buyers willing to pay the current market value, a scenario that’s even more realistic for owners of smaller, fuel-efficient vehicles that are more sought-after by consumers.
While SmartMoney cautions sellers that turning a profit won’t be easy, they do offer these options for cashing-in on the trend:
Play the private market, which offers the best shot at unloading your car near or at its current market value.
Trade in your used car for a new car.
If you lease, visit competing dealers before your lease ends to see how much they’re willing to pay for the car. Says SmartMoney: “Chances are it will be several thousand dollars more than what you’d pay to purchase the car after the lease.”
Hang onto the car. Cars last longer now than in years past. If your ride’s decent, there’s no need to burden yourself with a new car’s financing and interest fees.