The Great Recession was good for the used car business. Because fewer Americans could afford new cars, they bought used — and drove up prices.
“Due to historically poor sales years from 2008-2012, as well as 2009’s ‘Cash for Clunkers’ program that took nearly 700,000 vehicles off U.S. roads, used-vehicle supplies have been limited,” explains car-selling site TrueCar, whose analytics branch ALG just put out a new car price forecast.
June was the turning point, and used car prices have started to drop as more people can finally afford to buy new cars, ALG says. That’s the good news. The bad: It will take until 2019 to get back to where we were in 2008.
But if you want to save now, here’s what you need to know about buying a used car…
1. Not all cars lose value equally
Some cars hold their value better than others. If you plan to drive your next car until the wheels fall off, this might not matter to you. But if you plan to maintain and resell it, take a look at Kelley Blue Book’s annual Best Resale Value Awards.
The car-pricing guide uses its data to break out the best cars to buy in each category, from subcompact to high-end luxury. It estimates what they’ll sell for in three and five years, and you can look at past years’ lists, too.
2. Used cars are listed everywhere
There’s no one best place to find the best deals. Sure, some sites have better search features than others — but does that make bargains easier to find, or harder because people see and snap them up quickly? Here are some of the most popular places to start your hunt…
3. The car itself affects insurance rates
Premiums are based on all kinds of crazy variables, some tied to how you drive and others to what you drive. So it’s worth looking up average premiums for potential models and even getting a rate quote once you narrow down your selection.
Another thing to consider is how much insurance you need. If your car doesn’t have much value left in it, for instance, it may make sense to drop collision and comprehensive coverage in states where those aren’t mandatory. One rule of thumb is to drop them when the savings would be more than 10 percent of your car’s worth. (Read about other expert-recommended saving strategies here.)
4. A vehicle history report won’t lie
Private sellers can be easier to work with (and haggle with) than a dealer. But they can’t offer you any kind of “certified pre-owned” assurances about the vehicle’s condition. A vehicle history report can help, and you can order one just by knowing the unique Vehicle Identification Number listed on the title or on the car itself.
Companies like Carfax and Autocheck sell reports individually or in batches for $30-50. They can help verify mileage, accident history, recalls, flood damage, number of owners, and other things that might not be obvious from looking at a used car. Having a reliable mechanic look at it goes a long way, too.