One of the tenants of many personal finance bloggers is to always buy cars used. Since a car typically loses the biggest chunk of its value the first year (or really, the first day) after being driven off the lot, the advice is to let someone else take that financial hit.
With the average age of the current car on the road being almost eleven years (really?) people have definitely been taking this to heart.
I’ve noticed it over the past few years. Our two cars, a 2006 Pontiac G6 and a 2007 Buick Rainier, have held value very well. I track their estimated value through Kelley Blue Book, and in some months, the values actually increased. Lately, though, the value of both cars has been dropping month over month.
CNBC reports that the average value of a used car is now falling, around 2% from a year go. This is apparently the first time in a while this has happened, and is a byproduct of the fact that Americans are buying more new cars than they have for the past few years. As they do this, more used cars become available, thus dropping the price as the inventory increases.
If you’re selling a used car, this isn’t great news. But, if you’re buying one, this could save you a bit of extra money.
We’re not in the market to make any changes with our cars, so this has no effect on us for the moment. It would probably be a neutral thing if we did, considering our likely scenario would be that we’d sell one of our used cars (getting less than we would have a year ago) and buying a newer used car (and paying a little less).
What do you think? Are you seeing used car prices drop? Would this make you more or less inclined to buy a used car for your next purchase?