Why Used Cars Are a Good Deal Right Now
For the first time since 2008, prices on pre-owned automobiles have been falling. In fact, according to the NADA Used Car Guide, prices will fall 5% to 6% in 2016 alone. The reason is simple: There are more used cars available for sale than people who want to buy them. It’s classic supply and demand, with supply trumping demand for the first time in a long time. (For more, see 5 Ways to Buy a Used Car.)
Lease Returns Are Key
The return of 3.1 million formerly leased vehicles from 2013 is the main driver of the supply bump, reports the Wall Street Journal and CNBC. In addition, new car sales have increased, and that has helped decrease the overall demand for used cars. Depending on new car incentives and the impact that has on new car sales, prices on used cars could continue to drop as supply outpaces demand moving forward.
Go Small for a Bargain
In 2013, before gas prices fell, small cars were still the rage. As a result, many of the leased vehicles making their way onto used car lots are smaller, more fuel-efficient models. Add to that the fact that lower gas prices have inspired a desire for larger cars and, once again, you boost supply and demand in your favor. What’s more, you’ll have better fuel economy in the event that gas prices start going up again.
Best Deals in Off-Lease Vehicles
Experian identified the most frequently leased vehicles from 2013. The best deals come from compact and midsize sectors. Below is a list of specific vehicles from the 2013/14 lot considered to be the best deals by Experian. Prices, which vary depending on body style and options, are from Consumer Reports.
- 2013/2014 Toyota Camry midsize sedan – $15,625 to $19,000
- 2013 Honda Civic compact sedan – $15,750 to $20,350
- 2013 Honda Accord midsize sedan – $18,575 to $26,500
- 2013 Toyota Corolla compact sedan – $13,525 to $15,575
- 2013 Honda CR-V compact crossover SUV – $19,875 to $27,200
- 2013 Ford Escape compact crossover SUV – $16,525 to $24,450
- 2013 Nissan Altima midsize sedan – $14,150 to $22,125
- 2013 Ford Fusion midsize sedan – $14,250 to $24,250
- 2013 Lexus RX 350 midsize crossover SUV – $33,900 to $40,350
- 2013 Toyota RAV4 compact crossover SUV – $20,350 to $25,875
Special Case: Certified Used Car
Buying a used car is a gamble. Buying a certified used car reduces that risk, because it undergoes testing as well as a certification process that ensures the car you are purchasing meets a number of quality standards and has been vetted for its history. Unlike most regular used cars that are sold “as is,” a certified used car comes with a warranty. Having the warranty is helpful, because the certification process required to issue a warranty reduces the chance of a fault with the car down to as low as 1% in certain cases.
Best of Times – Worst of Times
In addition to which model you buy, it also matters when you buy your next used car. If you need a car right away, you may not have much choice. If you can be flexible, however, Popular Mechanics suggests buying in one of the six best months for deals, beginning with November, which offers nearly 27% more deals than other months, followed by December (23.5% more), January (16.4%), October (12.8%), February (6%) and September (3.8%). The six worst months are topped by April, which dishes up nearly 27% fewer deals than other months, followed by May (26% fewer), June (23.6%), July (11.5%), August (10%) and March (9%). (For more, see Car Shopping: New Or Used?)
The Bottom Line
By combining the best deals with the best time of year, you can maximize your savings on a used car – especially those coming off a lease. If you don’t mind paying a little more, for peace of mind consider a certified used car. Otherwise, most of the time it’s caveat emptor, which is why when buying a used car, no matter the time of year or the source, it always makes sense to have a mechanic check it out – especially if it isn’t certified or under warranty.