If you’ve asked yourself when the used car lots near me will drop their car prices, you probably won’t have to wait long. From coast to coast, the cost of used vehicles is set to drop, offering some relief for shoppers wanting to get into a used vehicle. Let’s take a look at this potentially used car bubble.
What’s Pushing Down the Cost of Used Vehicles?
If you’ve been waiting to get into a used vehicle at an affordable price, You probably won’t have to wait much longer. During the pandemic, an inflated auto industry meant drivers were willing to pay well above market value in order to get into a used vehicle.
As the price of used vehicles jumped nearly 40% at the peak of the bubble, many drivers simply backed away. Thankfully, as supply chain issues begin to resolve and supply begins to balance out, it’s starting to look like the used-car bubble is finally ready to burst.
Before you pull the trigger on buying a used vehicle, it’s important to know the driving factors behind this nursing bubble. Here’s what you need to know before you set out and start Googling ‘used car lots near me.’
Stabilizing Inventory Pushes Prices Lower
Lockdown restrictions all but put a halt to new car production, sending shoppers flooding into the used car space. As these supply chain kinks have begun to resolve themselves, inventory for new and used vehicles has begun to stabilize.
For consumers, more used cars on the lot mean more competitive pricing. As you shop, you’ll find yourself encountering more vehicles, giving you more room for negotiations.
As supply begins to stabilize itself, demand is cooling off as well. This is largely due to the rising interest rates. Many consumers are not willing to shop with these sudden rate spikes.
While this might mean different things for different shoppers, if you are looking to purchase a used vehicle in all cash or with a sizable down payment, this could be a great time for you to make a move. Despite rising interest rates, you can and should still shop around and compare different rates from different lenders.
Many dealers are also seeing an increased supply of used vehicles because of these high loan rates. According to recently released data by S&P Dow Jones Indices and Experian, auto loan default rates have jumped one basis point.
For drivers who purchased used vehicles with high-interest rates, their loans might now be worth more than their vehicle is. For some drivers, defaulting on their loans is the only path forward. Higher rates of repossessions mean more vehicles on lots. Still, these high rates are the same reason many of these vehicles are staying put for longer as well.
How Can You Take Advantage of the Used Auto Market?
Despite the current used auto market, there’s still plenty of room to get into a great pre-owned car, truck, or SUV at an affordable price. Start by doing your research and determining a budget you want to work within. Then, narrow down the different vehicles that fall within that budget.
If you’re able to, put yourself in the best position possible by saving up a sizable down payment. Having a larger down payment can help you negotiate a better rate and an overall better payment plan. As supply begins to stabilize, buying power is on your side. Don’t be afraid to shop around, negotiate, and leverage competitor offers to get a better deal on your used vehicle purchase.
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