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Recently, I have noticed some used car lots jam packed full of vehicles and some of them are sitting longer on the lots. I think the price is slowly declining and they are probably wanting to deal. Probably can gets a better deal on those with lower resale demand such as some GM vehicles, Chrysler, etc. The higher demand ones like Toyota and Honda will probably continue to have a higher used value for now.
All this talk about high used car prices make people ask for even more when they put their cars on the market. Also, people see selling prices and think they can sell at those prices too.
This has frustrated me to no end. Pretty sure that I'm going to end up buying a newer, lower-end vehicle rather than used, as many of the used cars that I've been looking at simply hold their value absurdly well.
Hoping that, for the next-next car, I can go with something used and higher-end, if the economy crashes or gas prices shoot up again. I drive <5000 miles/year and couldn't care less about gas prices.
The average transaction price for a new car exceeds 33K nowadays, and the average auto purchase contract has swelled to a scary 71 months, which is a dead giveaway that far too many folks are paying far too much for their new cars, as well as the fact that truck and SUV sales are soaring due to the collapse in gas prices, while hybrids and electric car sales are sinking, much to the chagrin of the green energy lobby including our President.
I'm not sure that's the conclusion to draw. It probably has a lot to do with how low the rates are on longer term loans. Let's say your 30 year mortgage is 3.5% and your 72 month car loan is at 1.9%. Even if you have cash to pay for the car, you'll save a lot more money by paying down the loan with the higher rate and longer term.
The way I see it with these low rate longer term loans, it's best just to put enough down so you're not under water. Beyond that there's probably something else you can put the money into or pay down. Putting $30K into paying off your mortgage would save $18K in interest over the life of the loan whereas the car loan would only cost $1775 over 6 years. Even if you only look at the 6 years of the car loan, that's still $1500 in savings taking the loan and paying off your mortgage faster.
I'm not saying that's what everyone does, but it certainly helps explain why the loan terms have increased. People who otherwise wouldn't need a long loan (or any loan) now see it as an opportunity to save money or put it to use elsewhere.
All this talk about high used car prices make people ask for even more when they put their cars on the market. Also, people see selling prices and think they can sell at those prices too.
What you're seeing is asking list prices. That's not the actual pace the vehicle gets sold for. Since there is no disclosure in car purchase you can't even get a average sold private party price. Besides its pointless. Most of these overpriced cars end up sitting on Craigslist with 30-40 separate postings and if you follow them you can read the frustration of the seller. Price is set firm then goes gown in $100 increments, then back up to original overpriced asking amount then down down. For MONTHS ON END.
And the car is really worth $1800 bucks they want $3800 and it needs $3000 worth of work. I rather bypass and buy a $6800 car to start with.
A car that's priced correctly won't last more than a few days.
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