A used automotive dealership is seen in Laurel, Maryland on Could 27, 2021, as many automotive dealerships throughout the nation are operating low on new automobiles as a pc chip scarcity has precipitated manufacturing at many automobile manufactures to almost cease.
Jim Watson | AFP | Getty Pictures
True, used-car costs have surged. You might be able to make that work in your favor.
With unrelenting demand and restricted stock for each new and used autos, you will not discover a lot wiggle room within the costs you see. The excellent news for customers, although, is that dealerships are paying extra for used fashions — which you could have sitting in your driveway.
“So many sellers are saying ‘We would like used vehicles,'” mentioned Ivan Drury, senior supervisor of insights at Edmunds.com.
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An ongoing international scarcity of microchips — key parts wanted for right this moment’s autos to function — has impacted producers’ manufacturing of latest automobiles, which has translated into demand outpacing provide. The consequence has been fewer reductions being supplied throughout the board, with some autos promoting for greater than sticker worth, and demand spilling over to the used-car market.
“As is all the time the case, the brand new automotive and used-car markets are tied,” mentioned Joe Wiesenfelder, government editor of Vehicles.com. “Excessive costs in a single have an effect on the opposite, and that is the place we’re.”
The typical quantity for a used automobile has jumped greater than 21% to about $25,400 from $20,900 a yr in the past. For brand spanking new vehicles, consumers are paying roughly $40,800, up about 4.9% yr over yr.
“It is tough to gauge how lengthy it can take for issues to enhance,” Wiesenfelder mentioned. “All of this depends on new-car stock returning to more healthy ranges.”
Capitalize in your trade-in
Whereas dealerships aren’t providing a lot in the best way of reductions or negotiating as a lot on costs as they’ve prior to now, trade-in values for vehicles are “by way of the roof” and automotive trade-ins are excessive, as effectively, mentioned Barry Stoler, president of Len Stoler Automotive Group.
“What [buyers] lose on reductions they achieve on the trade-in, as a result of these values are so excessive,” Stoler mentioned.
Even automobiles with larger mileage could fetch greater than you assume. The typical quantity paid for autos with mileage between 100,000 and 109,999 hit $16,489 in June, in contrast with $12,626 a yr in the past (a 31% soar), based on information from Edmunds.
Vans topped the record of the largest year-over-year enhance in common costs in that high-mileage class. For example, the Chevy Silverado 1500 offered for a mean $26,914 in June, a 49% soar from a yr in the past.
Even should you do not assume the automotive you are buying and selling in is value a lot, it might yield greater than you anticipate proper now amid elevated costs. And that is the place your negotiating expertise can turn out to be useful: You might not have the ability to get the value down, nevertheless it’s attainable you may push for extra in your trade-in.
“In case you have a trade-in, that sweetens the deal,” mentioned Drury at Edmunds. “The sellers need that trade-in.”
Even vehicles which are 9 years previous have common values which are up about 30% from a yr in the past, Drury mentioned.
Think about a lease buyout
If you happen to’re nearing the tip of your lease, you might be able to purchase it out for lower than what you’d pay for the automotive if it have been sitting on a supplier’s lot proper now.
It is because the residual worth — the automobile’s value on the finish of the lease — was established while you signed the lease a number of years in the past.
“These leases began earlier than anybody knew there’d be a pandemic or a chip scarcity,” mentioned Wiesenfelder at Vehicles.com. “There is a good likelihood that the market says the automobile is value greater than what it was predetermined to be.”
If you happen to take into account going this route, make sure to know your state’s sales-tax guidelines that will apply, as a result of that may add to the price of the buyout, based on Vehicles.com.