Used car prices averaged $25,410 during the second quarter of 2021, up from $20,942 a year ago, according to automotive resource site Edmunds. That's a 21% jump.
Because of the global microchip shortage, manufacturers are unable to produce enough new cars to meet demand. That's driven consumers to the used-car market, where prices are spiking and many lots are totally sold out.
If you're in the market for a new or used car, you can expect slim pickings when you get to the lot, and little room for negotiation on prices. On the other hand, you may be able to sell or trade in your current car for more than you could have in previous years.
If you're in the market for a used car, your money might not go as far as you'd like right now, Scotty Reiss, founder of A Girls Guide to Cars, recently told Grow. "I need to buy something for my daughter, who is sophomore in college," she said. Even with a plan to spend $20,000, she added, "what we want to get for our budget is probably putting us back a model year older than we'd like."
But there are some guidelines to follow that can ensure you purchase a quality vehicle. "I think the sweet spot [for used cars] is 3 to 4 years old, with 30,000 to 40,000 miles on it," Reiss said.
No matter how old or new the car is, always make sure to check the vehicle history. It will tell you how many people have owned the car in the past, how many accidents it's been in, or if there are any open recalls on it. If a car has an open recall, that means it has an issue that hasn't been addressed — and that you'll have to deal with once you buy it.
You should also take the car for a test drive, and get an independent inspection from a mechanic you trust.
If you own a used car, this might be a great time to sell it or trade it in, Ivan Drury, Edmunds.com senior manager of insights, told CNBC.
"So many dealers are saying, 'We want used cars,'" Drury said.
The trade-in value of vehicles is increasing, even for cars with a decent amount of miles. A year ago, a car with 100,000 to 109,999 miles would have been valued, on average, at $12,626. This year, the average value is $16,489, according to Edmunds.
Trucks, specifically, are spiking in value. For example, the average Chevy Silverado 1500 sold for $26,914 in June, a 49% jump from a year ago.
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