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Used car prices at 16-year highs: Time to sell?

There's a great market for used cars right now if you're selling one. Dealers are paying a lot more than they did just a few months ago.

Why?

AOL consumer adviser Regina Lewis, who covers personal finance for DailyFinance.com, an AOL site, said it has a lot to do with good old-fashioned supply and demand.

"We're talking about 16 percent more year over year - 16-year highs. Pretty incredible. Bottom line, people are holding onto their vehicles longer - about a year longer. ... So they're simply not trading them in."

Lewis said when she visited CarMax, a representative told her the lot is half-empty at many used car dealerships.

Additionally, since 2008, credit has tightened.

"That means people had trouble getting leases," she said. "If you fast forward to 2011, right about now, these leased cars would be used cars. That pipeline is dry. Rental car companies did the same thing; they didn't buy as many. Those used vehicles aren't there. And of course, things in Japan exacerbated things."

If you you're selling a used car, Lewis said, you're going to get a good deal across the board right now, but particularly small, compact vehicles and hybrids are in demand because of gas prices.

"Every dollar in gas prices on average increases the value of a small car by 10 percent," Lewis said. "So that $10,000 small car on the lot, boom, gas prices go up $1, it's now worth $11,000."

The Ford Focus, for instance, since last year, has gone up in price substantially.

"It would have been worth, the 2008 model, $7,500. Today it's worth $9,600. That $2,000 spread, if you think about it, if you had a $200 car payment, you could have been driving this vehicle for the last year, pretty much would have paid for itself."

Another car selling for more money these days is the 2008 model of the Hyundai Elantra SE. The car in 2010 sold for $9,300. Today the car is worth $10,700.

The 2008 Toyota Prius is an extremely good sell. In 2010, the car was worth $13,300. Today the used car is priced at $17,950.

However, some cars aren't selling so well these days. SUVs and other gas-guzzlers are tough trade-ins, Lewis sad.

"A lot of people are upside down on their SUVs," she said. "(That means) their loan is more than what they could get for it."

However, the prices won't last long, Lewis said.

"I talked to (a) renowned auto journalist in Detroit, and he said the general consensus is it's going to level off this fall and into 2012," she said. "So it really is a moment in time."

To get the best deal when selling your car, Lewis recommends these tips:

Know your car's blue book value
www.kbb.com

A good place to get a ballpark asking price is the Kelley Blue Book. After entering details about the features and condition of your vehicle, Kelley Blue Book provides a free estimate of the value.

Compare similar sales in your area
www.autotrader.com

Investigating how similar cars are selling in your area is key in determining a fair and accurate price and unloading your car quickly. Just as a realtor looks at comps in your neighborhood before setting the sales price for your home, you want to do this kind of legwork when selling your car. It will take you less than five minutes.

Also, it will also help you, this is an advanced move, if you are about to get out of a lease and you have a low residual value, meaning you can buy that car for a lot less, if you go to AutoTrader.com, it might reveal the fact you should buy that lease out, go down to another dealer down the street and sell it. You could use that profit for a new vehicle.

Edmunds.com offers a similar service to AutoTrader and Kelley Blue Book.

List it online
autos.aol.com/classifieds

If you want the best chance to sell your car for what it's really worth, plan on selling it yourself to a private party. Sure, it takes a little doing and it's tempting to just trade it in - but trading in your car to a dealership can knock off up to 10 percent of the price. Create a free listing online on sites like AOL Autos. You can include up to 12 pictures of your vehicle. Listing it online is the fastest and most efficient way to reach potential buyers. And while you're at it leverage your Facebook friends and Twitter followers. Let them know you're selling your car; you never know who may be in the market. Be sure to include a link in your post to your online sales listing.

Get paid the right way
Always be sure your buyer either pays you in cash or with a cashier's check. Never accept a personal check; it's just too risky. And, so you don't waste your time with unqualified buyers, if a buyer is planning to pursue a loan, you should ask them if they're pre-qualified.Keep in mind, it is especially challenging for an individual to get a car loan in a private sale, because it's viewed by lenders as inherently riskier. They trust dealerships to review a cars condition and make sure certain checks and balances are in place.