Why next year's too late to buy a used car
If you are shopping for a used car, buy it now for the best deal. That's the word from analysts at Kelley Blue Book, who say you could pay 4 percent to 6 percent more for that car if you wait for the first three months of 2012.
Used car prices went for a roller-coaster ride in 2011. With gas prices hitting $4 a gallon early in the year plus shortages of some new cars resulting from the Japanese earthquake and tsunami, used car prices surged. High-MPG cars rose especially quickly; shoppers were eager to boost their mileage and cut gas costs. But after peaking in June, gas have fallen back below $3.50; used car prices overall are down 10 percent; and those for high-MPG cars have plummeted by 20 percent.
Good deals abound now in this low-demand period when most people focus on shopping for holiday gifts instead of cars. But that traditionally changes with the start of a new year and a sizable increase in demand. And price increases are likely to be higher than the historical 1 percent to 4 percent for the first quarter. Because of low new-car sales two and three years ago, the supply of trade-ins and lease returns will be tight in supplying the used-car market, said Alec Gutierrez, manager of vehicle valuation for Kelley Blue Book. "Due to that potential supply shortfall next year, values may increase 4 percent to 6 percent," Gutierrez added.
Shopping for the best deal
If you are considering a used car, here are some points to consider:
-- Look for a good used car with lower resale value. Cars that hold their value are a great thing if you are selling a used car. If you are the buyer, not so much. For instance, both the Honda Accord and Ford Fusion (pictured above) are on the Consumer Reports list of best used cars. But a 2009 Accord LX (which enjoys typically high Honda resale value) will cost about $16,070 from a dealer, according to Kelley. A 2009 Fusion S, which does not hold value as well, is selling for $14,320 -- a savings of $1,750.
-- Ponder your trade-in value. If you have been thinking about trading your old car for a new one, the dealer scramble to find good used cars might net you a strong trade-in. If that is your situation, however, it makes sense to wait to attempt a trade-in, probably until Spring, when demand always surges.
-- Verify the history of any used car. Check with CarFax and its chief competitor AutoCheck, which get reports from insurers, police departments and other sources on accidents and disasters. If you are considering buying from a dealership, it may be able to show you these reports for the cars you are considering. Otherwise, it costs $34.99 from CarFax and $29.99 from AutoCheck for a single vehicle report and $44.99 at both for multiple vehicles. Be especially cautious about any vehicle that came from a state where there was flooding during Hurricane Irene last fall. A high number of cars were flooded during that storm.
Photo courtesy of Flickr user wnealis
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