This post is contributed by Charles Krome, automotive writer for CARFAX.
Price is a primary factor for most people who buy a used car, and preowned vehicles can definitely offer big discounts. But there’s truth to that old saying that “you get what you pay for,” especially when it comes to paying for a used car or truck.
The average retail price of a used vehicle is on the rise, coming in with a starting point above $19,000 this past fall. That’s partly because of the reduced number of trade-ins on the market (people are holding onto their cars longer) as well as the influx of younger cars since leasing is so popular (when those lease contracts are up in a few years, the younger off-lease vehicles will enter the used-car market).
But there are other reasons you might notice that prices for used cars are higher than you expected — and some of them may be a good thing. Here are 5 reasons why you might pay more for that used car and why it may actually be worth it.
1. The vehicle has next-generation technologies
Once automakers regrouped after the global recession of the early 2000s, they came out with a new wave of high-tech cars that continue to see advances today. Indeed, the latest vehicles have so much new tech on board that we’re fast approaching a time when they can drive themselves. But at this stage in the game, a lot of those goodies also can be found in preowned vehicles. Navigation, rearview cameras, Bluetooth®, blind-spot monitors, voice recognition, automatic braking, and the oft-promised “much, much more” are all becoming increasingly common in used cars. The same is true for comfort and convenience technologies, like heated seats and steering wheels. Needless to say, those features also increase the price of a vehicle, regardless of whether it’s new or used.
2. It’s been well maintained by its previous owners (and hasn’t had a lot of them)
When you’re shopping for a used car, what you don’t want to purchase is someone else’s mechanical problems. With that in mind, there’s generally a premium for preowned cars that come with comprehensive maintenance records, proving the owner kept up the vehicle as recommended. Additionally, the car’s owner (or owners) can also provide a clue to a vehicle’s condition. One general rule of thumb is the fewer the number of past owners, the better. Used cars from rental fleets, for instance, are likely to see some fairly hard use while in service. And sometimes, if a car has passed through the hands of multiple private owners, that can be a sign of recurring problems. (Always have your own mechanic look at a used vehicle before purchasing it.)
3. It’s never been in an accident
Beyond scheduled maintenance and the like, a separate factor affecting a car’s condition (and value) has to do with whether it’s ever been in a crash. In fact, 1 in 5 vehicles for sale has been in an accident, and knowing this information can affect how much you pay for a car. A vehicle history report can be a vital advantage for shoppers in this regard since it alerts you to reported incidents, and it’s a great idea to get one as part of the decision-making process. But remember, it can’t ensure the repair job was done properly. Also, it’s not uncommon for car crashes to be completely unreported in the first place, so think of it as yet another reason to have your mechanic check out the vehicle in advance. Plus, a clean bill of health is another reason you can expect to spend more on a used car.
4. You’re looking for a specific kind of vehicle
If you’d like a used model of the best-selling car in the United States — the Toyota Camry — there are millions still on the road today. Yet even if you’re a Camry enthusiast, the selection quickly gets smaller as your range of requirements grows. Finding a certain model that’s in good condition, with all the features you want, at a price that meets your budget, and in your local area, can be a challenge no matter which vehicle is on your shopping list. Of course, a car that was rare to start with, say a 2008 Ford Mustang Shelby GT500KR that was limited to only 1,000 units, can also command a higher price than a mass-market used-vehicle entry.
5. The used car actually isn’t a car
New-vehicle customers continue to prefer pickups and SUVs to cars this year and that trend is spilling over to the used-vehicle market as well. Demand for light trucks — including pickups, SUVs, and minivans — is outpacing supply. That, in turn, is having the expected effect on costs, particularly for compact trucks and traditional large and midsize SUVs. Those used vehicles had some of the highest jumps in transaction prices during the third quarter of 2016. In fact, pricing for the biggest preowned SUV increased by one percent during that time, with only premium luxury SUVs seeing a larger gain. But whatever the size, used light trucks will typically cost more than cars of the same length.
So before you get sticker shock on that used car, keep in mind these contributing factors. You could be getting what you pay for, and though that might mean a higher price, it could also mean a better value.
Growing up in Detroit, Charles Krome became a car enthusiast at a very young age. Now, he writes for CARFAX about all things cars. He prides himself on sharing insider tips about how to get the best deals when buying a car.