Are Used Car Prices Going Up? When It's the Worst Time to Buy

February 24, 2017

People who are interested in buying a previously owned vehicle may experience stress when they notice used car prices going up, but this upward trend tends to be a boon for those looking to sell their pre-owned vehicles. When car prices are high, most customers agree that it's a bad time buy a new car. At this point in time, there are several different factors that have pushed used car prices higher than they would have been several months ago. If you're considering buying a used car and have a limited budget, you may be best off watching the used car reviews and price guides and waiting until the prices return to normal before making your purchase.

Economic Recession

One of the primary reasons that the cost of used cars has risen significantly in the last few months is the nationwide economic recession that has struck. In times of financial trouble, car buyers frequently turn from the new car market to the used car market for their vehicle needs. What happens in these cases is that the new cars sit on the lot without anyone to buy them, but that used cars experience a surge in demand. You may notice that certain types of used cars can be harder to come across in today's market than equivalent models of new vehicles from the manufacturer's warehouse. This is because the heaviest competition is for the cheaper used models of these cars, not for the brand new versions. Paradoxically, the competition for the cheaper used cars causes the prices of these vehicles to rise.

Another reason that the economic recession has caused the price of used cars to jump is that fewer people are purchasing vehicles in general. As a result used car dealers have been forced to raise the prices on their inventory simply to continue to make a living and to support their employees.

Cash for Clunkers Fallout

The Cash for Clunkers government program offered an incentive to people who turned in their used cars and purchased new vehicles. This program was in effect for the latter part of 2009. While this program did successfully stimulate some sales in the new car market, all of the used cars that were turned in as part of the exchange were subsequently demolished or torn apart for scrap parts. This effectively disturbed the natural balance of used cars in the marketplace and made some brands of car exceedingly uncommon. In turn, these now-rare brands of used car can be more expensive as a result.

In times of economic crisis or recession, you as a consumer can take advantage of the fact that some people will be in personally difficult straits and will have to sell their cars. While dealer prices on used cars may have risen in recent months, many individual sellers are offering some of the best prices on record for used cars of a variety of types.

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