Everyone is looking for a good deal, especially when it involves buying a car. Used car prices are on the rise, but there is one type of vehicle that offers a chance at that oft-chased good deal: small cars.
Prices for subcompact cars are bucking the pricing trend for used cars, according to Edmunds.com. They are down 6.3% while overall prices for previously owned vehicles are up 2.7% for the second quarter of the year.
It’s not just the Chevy Sonics, Ford Fiestas and Honda Fits that are taking hits, compact and midsize car prices are down as well. A combination of hot-selling new cars and low gas prices are doing in the pricing on smaller vehicles.
“If you’re a used car shopper in the market for a small vehicle, this is a great time to buy,” said Edmunds.com Senior Analyst Ivan Drury.
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“Prices are down for these vehicles because there is so much more demand for used trucks and SUVs. There are also lots of smaller cars coming back to the used car market as people trade up into larger vehicles. So not only are prices low on used small cars, but there’s also a wide selection available.”
Overall, used car prices are averaging $19,367 – an all-time high – however, subcompacts are just $11,461. Compacts ($12,153) and midsize cars ($13,892) are just slightly more. Much like their new compatriots, they’re not the hot sellers; however, just as is the case with new vehicles trucks and crossovers are seeing significant upticks in prices.
Prices on used compact trucks, for example, are up more than 10% year over year. Other used vehicle segments with notable increases are large traditional SUVs (8.9%) and premium luxury SUVs (7.7%).
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“Demand is driving higher prices on traditional SUVs, so shoppers in the market for these types of vehicles may want to explore other options,” said Drury. “They might want to consider, for example, a large crossover SUV, which offers similar size and utility, but is available at a much better value in today’s used car market.”
Another area mimicking the new vehicle trend: longer loans. Since used car prices are at an all-time high, much like new car prices, buyers are taking out longer loans to offset the impact on their monthly payments.
Consumers are helped by low interest rates, which have fallen from last year, on used car loans now averaging 67 months.
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The second quarter of 2016 saw 9.8 million vehicles sold in the used car market, an increase of 1.8% over the previous year. Franchise dealers’ used sales were up 4% over the second quarter of 2015 — its best Q2 ever.