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It wasn't that long ago (8 or 9 years ago) where I could find a 3 year old lower end car with 30k miles for under 10 grand. Now the same car costs about 30-50% more. The used car market is insane! New cars are priced much higher as well. What happened?
The real question is, why are people still willing to pay for it.
I don't know but there must be a lot of demand for cars these days. Maybe it's due to the economy improving? 2009 probably would have been a great time to buy
The average car on our rods these days is almost 11years old; that's why their selling like mad, although the fact that the average transaction price on a new car is around $33K coupled with the fact that the average length of a new car contract is around 70 months sounds like a bubble in the making.
On top of all that, sales of huge pickups and SUVs are soaring thanks to cheap gasoline while sales of hybrids and electric cars are plunging, much to the disgust if Obama, Steyer, Moonbeam and all the job-killing treehuggers out there who can't stand it!
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
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Quote:
Originally Posted by Chris V
The real question is, why are people still willing to pay for it.
people ARE willing and able to pay... (dual income families and $16.hr minimum wages!)
BTW, there are still plenty of CHEAP cars, tho not nearly as cheap as 20 yrs ago. (Now you have to often pay $500 instead of $100). 40 yrs ago it was ez to get a decent driver for $100 (or below).
With Chinese freeing the steel price, abandoned vehicle auctions will be dropping minimum bids. (probably to $50 / car). Was up to $100, used to be $35. (pre 2008 / China Olympics...)
Don't forget "Cash for Clunkers" which removed numerous cars from availability. The supply dropped but demand remained the same so prices on all cars went up.
High volume cars, loaded with tech like the Accord and Camry are really great deals and compare favorably with with luxury cars from 10 years ago costing far, far more money.
If you want to buy a used Oldsmobile or Pontiac then go right ahead - the are cheap
Don't forget "Cash for Clunkers" which removed numerous cars from availability. The supply dropped but demand remained the same so prices on all cars went up.
Using this as an excuse as to why late model used cars are expensive is getting a little old. This program ran in the summer of 2009, and by and large removed a lot of older body on frame trucks and SUV's from the market (as well as some cars). A total of 690,000 vehicles were scrapped.
It's now 6 years later. The impact on late model used from that program is minimal at this point.
I think the more likely culprit is a low supply of used due to extremely low new car sales over the past 7 years compared to historic sales before the recession. Now that people are buying cars again, the used cars just are not available. This combined with quickly rising new car transaction prices as people opt for ever increasing amounts of features along with ever increasing needs for more mandated safety equipment, and it leads to more costly used prices.
And then you have people like me who buys new and runs the car/truck until it surrenders. I have an '02 Taurus wagon with some body damage and 230K on the odometer (original engine and transmission) I can sell you.
New and used cars have generally gotten more expensive over the last 5-10 years or so, but not consistently. For example, family sedan prices have barely budged during that time - you can still get a very nicely-equipped Honda Accord for 21-22k, just like you could 10+ years ago. More people are buying crossovers instead of family sedans, which has helped keep their prices down.
The most ridiculous appreciation has been in the full-size truck world. My dad's 2007 Tundra, with four doors, 4x4 and the big V8, cost $23k new. $23k hardly buys anything in the truck world today - the equivalent truck would go for 35 or more.
I think the traditional Dave Ramsey advice of "buy used!" is practically obsolete, at least until the used car market corrects. With 3-year-old cars having depreciated so little, and new cars more feature-packed and safe than ever, there's little point in buying someone else's problem.
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