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Is it a good time to purchase a secondhand vehicle? Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our goal is to help you make better financial decisions by offering interactive financial calculators and tools that provide objective and original content, by enabling you to conduct research and analyze data for free to help you make financial decisions with confidence. Bankrate has agreements with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn money The products that appear on this site are from companies who pay us. This compensation can affect the way and where products appear on this site, including for instance, the sequence in which they be listed within the categories of listing and other categories, unless prohibited by law. This applies to our mortgage home equity, mortgage and other products that lend money to homeowners. But this compensation does have no impact on the information we publish, or the reviews that you read on this site. We do not cover the entire universe of businesses or financial offers that may be open 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 specializes in assisting readers with the details of borrowing money to purchase the car they want.
Edited by Rhys Subitch Edited by Auto loans editor
Rhys has been editing and writing for Bankrate from late 2021. They are dedicated to helping readers gain the confidence to control their finances with precise, well-studied information that breaks down otherwise complex topics into manageable bites.
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Buying a comes with many advantages, such as a slower depreciation, lower cost and a cheaper upfront price. The current situation of the automobile market bolsters the last aspect — the new cars have reached record levels in the last week of summer, making this the perfect time to think about buying a second-hand car. The present condition of the used car market The summer ended with record prices. The average used car sold for $28,219 in July, and the $28,061 mark in August according to Kelley Blue Book. However, used cars are significantly less expensive than the ones offered at new car dealerships. Since the start of the pandemic, vehicle market has swung dramatically away from normalcy and has been slowly moving back toward normalcy, but without much progress. But it is not all negative. While we’re still not at 2021 levels of used prices and availability, it is a favorable spot to buy used and refurbished vehicles, says Chris Frey, Cox Automotive’s chief economist and industry analysis. Unfortunately, the cost of financing, purchasing and operate vehicles is still at record levels. These prices imposed by the Federal Reserve make the cost to finance your car higher and fuel prices are also fluctuating. But financing a used car is still lower than new at $515 per month as opposed to an average of $667 during the first quarter 2022 according to . If you choose to purchase buy a used, less costly vehicle , you’ll save on your monthly installment. The prices of used cars are decreasing, but not by much. In general, used prices are declining, according to Henry Hoenig, a data journalist for Jerry but not much. The Jerry team looked at the top selling vehicles of 2022 and compared them to 2021 models that were lightly used and found that “As of August, only seven of the 10 vehicles were worth more than the cost of the pre-owned models.” This means that the prices of used cars are still more expensive than they were in the past, but they are on par with the current volatility of the market. The inventory of used vehicles also remains much larger than it was, because dealers remain in a state of catching up to supply chain issues. Therefore, although prices may be more expensive than they’ve always been before, availability of used cars is above the availability of brand new vehicles. The inventory of used cars is up by 10 percent to this time in the year before, according to the third quarter of Cox Automotive’s market research which is a good sign for the coming year. “Prices remain high because there aren’t enough vehicles available,” Hoenig says. “It’s crucial to keep in mind that this isn’t like some of the other COVID-related shortages that we have experienced.” While the makers of other items used daily were able pick up quickly, cars can be more difficult to manufacture. It’s important to keep in mind that the used car market is driven by people who are getting rid of their vehicles and if there aren’t so many people who are buying new vehicles, there could be a domino effect on the availability of used cars down the road. Due to these combined aspects, you might encounter increased competition and slightly more expensive prices for used cars However, that doesn’t mean purchasing a used car an undesirable option. Should I buy a used vehicle? The decision to buy an used vehicle comes down to need. There isn’t a perfect solution and there are many macro-environmental impacts increasing costs. Because while experts predict that new vehicle inventory should be back to normal by the spring of 2023, many drivers don’t have the luxury of waiting for prices to fall. If you’re planning to purchase a car, buying used over new can result in savings. The factors that make up high new vehicle demand and lower inventory, coupled with interest rates above usual levels mean that the price of vehicles is higher in both cases, however buying used is considerably more affordable. Top 5 questions to ask when purchasing a second-hand car . Although it is lower , it can carry the added anxiety that comes from a car that has no history. To mitigate these feelings be sure to ask the appropriate questions to gain an understanding of the background of the new car. 1. What is the owner’s history of the vehicle? A car with a lot of owners is not necessarily negative, but it could indicate that the car was plagued by major issues that drivers tried to avoid fixing — or could not solve. Ask the dealer how many owners it had and the length of time each driver had it. Owners who have a short period of time can be cause for anxiety. Bankrate tip
Think about buying a car. The vehicle must also meet the additional specifications set by the manufacturer. The manufacturer must also guarantee against any vehicle defects.
2. Did the vehicle have any accidents? Although you can check a vehicle’s accident history on sites like Carfax or AutoCheck but it is better to inquire with the dealer prior to purchase. Even if the collision was minor , it’s crucial to find out what the procedure was for handling the damage and if you’ll have to take care of any repercussions when you purchase the vehicle. 3. Do I have access to the maintenance documents? Most dealerships that are authorized to sell vehicles have records of the done on the vehicle, however asking them directly is an effective way to determine the quality of care given to the vehicle. Avoid buying the vehicle that isn’t subject to regular maintenance, as it may result in higher costs down the road. 4. Does the vehicle have a clear title? A clear title for a vehicle indicates that the car does not have any remaining disputes with the ownership of the vehicle as well as confirming that the vehicle does not carry any restrictions that block it from being sold. If the seller cannot present a clear vehicle title consider this to be an indicator to walk off the deal. 5. May I take the car out for a test drive? It is vital to test drive the car before signing on the dotted lines, particularly when you are purchasing an older vehicle. Be patient when driving, and make sure you assess the car’s handling and condition. of the vehicle. It is also an excellent chance to chat in a relaxed setting and ask the salesperson any questions regarding the vehicle. Next steps Buying used is the best option to get behind the steering wheel of a relatively new car while saving money. And while yes, the prices of today might be higher, buying used is still less expensive than buying a brand new alternative. The secret to finding the most affordable used car is making the appropriate inquiries and negotiating the most favorable financing offer. Find out more
Authored by Auto Loans Reporter
Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers with the details of taking out loans to buy a car.
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 passionate about helping readers gain the confidence to manage their finances by providing clear, well-researched information that breaks down complicated topics into bite-sized pieces.
Auto loans editor
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