If you're thinking about buying a used car, get ready for a surprise that even local dealers didn't see coming. If you're thinking about selling your used car, plan on making more cash than you probably thought. People are holding on to cars and trucks for about a year longer than they did before the recession, which has created a tight supply of used vehicles. So few are on the market that prices have risen to their highest in at least 16 years.
"People are absolutely buying pre-owned instead of new. I would buy something like this car last year for about 20% less than what I'd pay for it now," said Sacramento used car dealer Amir Daneshear.
The economic ripple effect has smacked the car industry from all sides. Not a lot of people want a new car because once you drive off the dealership lot, the car is worth thousands less than it was before you left. Fewer new car sales translates to fewer people pumping up the used car market with trade-in's and that's where the standard supply and demand equation comes into play.
"They might have bought a car two years ago and now they're trading it in and getting more money than they paid for it," said Daneshear.
When dealers have to compete for vehicles, they pay more and that increase in price is passed on to buyers. Daneshear told us the prices he seeing now could be on average 20% more across the board.
"When I sell cars, my biggest concern is how am I going to replenish those cars for the next week. I used to go to one auction and get five cars, now I got to five auctions to get one car," said Daneshear.
Fewer people are leasing cars too and returned leases are a big part of the used car market. Some models are worse than others when it comes to the jump in price. Toyota and Honda sedans have increased the most, but the biggest jump was Toyota's Prius. Last year's Prius model is worth almost $4,000 more than the original sticker price.
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