Will used car prices get better in 2023?

When you performed research for your car-buying journey in 2022, you might’ve been shocked by the rising prices of used vehicles. Below, you can learn why used car prices spiked in 2022, what the outlook is for 2023, what the benefits of buying a used vehicle are, and how much a used car may cost.

Why Did Used Car Prices Spike in 2022?

To understand why used car prices rose in 2022, you must first understand the situation with new cars. According to J.P. Morgan, there was a shortage of performance chips that are widespread in the manufacturing of new cars and increased raw materials costs. Because of these two main factors, car manufacturers weren’t producing as many new vehicles.

As a result, consumers weren’t able to find the new vehicles that they were searching for when they visited dealerships. Instead of going home empty-handed, they would seek out used vehicles. As you can see, this caused a spike in demand for used cars. As the demand for used cars increased, these vehicles became more expensive and less easy to find for sale.

When Will Used Car Prices Drop?

At the end of 2022, the prices of used cars dropped by more than three percentage points compared to their prices one year ago. While used cars are still quite expensive, 2023 might be the year for used cars to stabilize their prices.

USA Today expects used car prices to drop as much as 20%, while more conservative estimates predict a drop between 2% and 10%. Experts expect these price decreases to occur as inventory improves and the demand for used cars stabilizes. With the Federal Reserve planning to continue raising interest rates in 2023, inflation might continue to go down and affect the price of used cars in a more indirect manner.

What Are the Benefits of Buying a Used Car?

Here are some benefits of buying a used car:

You Can Avoid the Bulk of Depreciation

Car owners recognize that the bulk of depreciation occurs during a car’s first year, as it can lose up to 20% of its value during this period. When you buy a car that’s two or three years old, you don’t have to experience this chunk of depreciation.

You may even benefit from buying a car that’s older than five years, as a car can lose anywhere between 50% to 70% of its value during its first five years of life. While a 20-year-old car may be a risky investment, a vehicle that’s seven or eight years old may be well worth your money.

You Can Buy a Certified Pre-Owned Vehicle

When aspiring car owners think of buying a used vehicle, they may think of buying a vehicle from an online local classified ads website with no paperwork to back up their purchase in case something goes wrong. This simply isn’t the case, as many dealerships offer the chance to buy certified pre-owned vehicles. A certified pre-owned vehicle undergoes a thorough inspection to ensure it doesn’t have any underlying mechanical problems. It may also come with a warranty, whether that be a warranty from the manufacturer or a dealership’s certificate.

You Can Study Available Data to Ensure You Get a Good Deal

When you buy a used vehicle, you don’t have to go into it blindly. You can read ample reviews of used cars online. Learn about cars’ durability, safety features, and other important factors from real users. When you buy a new car, you don’t really have a plethora of information to study. Instead, you’re a guinea pig who’s one of the first real consumer drivers.

There’s also plenty of data available for individual vehicles to ensure you get a good deal. For example, you can review a vehicle’s paperwork to see if it’s been involved in accidents, what climate the previous owners drove it in, and how many owners it previously had. You can also use online pricing tools to understand what price a car is going for and whether or not your dealership is offering a fair price.

To suppress any of your worries, you can do business with a reputable dealership like our team at Cochran Cars. We have years of experience in the industry, so we’ll help you find a used vehicle at the right price point so you won’t ever overpay.

Used Vehicles Might Be More Reliable

Used vehicles have had time to endure recalls, and it’s likely that manufacturers have already addressed major issues that have occurred. Newer vehicles might have underlying problems that consumers haven’t yet discovered. You may be investing in greater safety and fewer problems when you purchase a used vehicle with a history that manufacturers already know about.

How Much Does a Used Car Cost?

While you may be able to find a used car for under $20,000, some used vehicles cost upwards of $50,000 or more. The cost of a used car can vary greatly depending on several factors. For example, a vehicle with more mileage may be less expensive than a vehicle with less mileage because the latter likely has a longer remaining lifespan. Other factors that can affect how much you pay for a used car include its current condition, its manufactured year, its model, and whether it has existing mechanical issues.

Still, you may not pay the same amount for a used vehicle depending on specific aspects of your financial situation. For example, if you have a vehicle you’d like to trade in, you can apply the value of it toward your purchase of a used vehicle. Your monthly payments will end up being less than if you were to finance the entire cost of the car. You may also end up paying less depending on the interest rate you’re able to secure and your chosen loan period.

If you’re ready to start your journey of looking for used SUVs, cars, or trucks, be sure to contact our team at Cochran Cars today. We’ll help you find a practical and stylish vehicle within your established budget.

Chevy Malibu by Jason Lawrence is licensed with CC BY 2.0