Find out why RIGHT NOW could be the perfect time to purchase a used vehicle.
It’s been said many times over the last several months, but it bears repeating: 2020 has been a year unlike any other.
The coronavirus pandemic and resulting economic downturn have touched all aspects of life. This includes buying a used car.
The value and availability of preowned vehicles has been impacted by COVID-19. Similar to items like toilet paper, disinfectant and rubber gloves, prices have risen because of increased demand and inadequate supply.
Used car dealers are facing a supply and demand crunch.
There are several things contributing to the current imbalance in the preowned vehicle industry.
One of the key reasons for increased demand is because people want to avoid public transportation. They’re concerned about being exposed to the novel coronavirus on trains, subways and buses. That’s why they are buying cars to get around in, even in cities like New York, Boston and Washington that have robust transit systems. Add to this the many people who are currently unemployed or underemployed and still need to replace their rides. All these factors are creating a record demand for affordable cars.
Even though there are some budget-friendly new car models, the selection and cost aren’t close to what’s available in the used car marketplace. New cars aren’t a realistic option for many buyers today.
In addition to demand, the used car industry is dealing with supply-side issues in many places. Fewer people are purchasing new cars right now. That means there aren’t as many trade ins happening. People who buy used cars are less likely to trade in vehicles because they may not have one, or if they do, it could be a junker. This is forcing used car dealers to get creative about finding quality inventory.
With demand on the rise and supply limited, used car prices are going up in most parts of the country. It’s also becoming more challenging to find the ideal ride.
Despite these issues, NOW could be the perfect time to purchase a pre-owned vehicle. Here are five reasons why.
1. Supply today is better than it will be in the months ahead.
There’s no sign that the trend toward buying used, rather than new, automobiles is going to end any time soon.
The COVID-19 pandemic continues to wreak havoc. And while vaccine availability is only a few months away, it’s likely that it could be well into 2021 until the disease is under control and people feel comfortable using public transit again. It’s also very possible it will take time for the economy to improve, business to stabilize and unemployment to be reduced. All this means there will be ongoing demand for used cars for the foreseeable future.
Add to this the fact that fewer people are buying new car models and production was shut off during a big part of the year. Because of this, the supply of used cars could be inadequate for years to come.
Taken together, these factors suggest that used car inventory could be at its peak right now. If there’s a model you really want, you’re more likely to find it on a lot or online today compared to months from now.
2. Prices now are lower than they will be in the future.
With the ongoing increase in demand and reduction in inventory, it’s likely that prices will continue to go up. Used cars may not be bargains compared with six months ago. However, it’s likely they are cheaper now than they will be six months in the future.
It could be a smart move to buy now before costs increase even more.
3. Seasonality is your friend.
People avoid buying “new” used rides in the fall and winter months, especially in colder climates. Most have concerns about driving an unfamiliar vehicle in challenging weather. They’re also worried about possible damage from salt, snow and hail.
During “normal” times, used car demand grows in the spring, when weather improves and everyone wants to change up their rides. If this happens again next year, the current heightened interest in preowned vehicles could spike even more in the second quarter of 2021. It could be smart to buy your car this winter rather than waiting for better weather to arrive.
4. Your car could depreciate less than you expect.
The value of vehicles depreciates over time. It’s a reality, unless you purchase an antique car that belongs in a museum.
With the prices of pre-owned vehicles on the rise, it’s likely that any one you buy now will retain more of its value in the years ahead than it would have in the past. This could make it a smart time to purchase a late model used automobile that you might need to trade in or sell in the years ahead.
5. Used cars are still cheaper than new ones. And they make it possible to upgrade your ride.
While the cost of most preowned vehicles is on the rise, they are still cheaper than buying a brand new model. A used car is a great way to get a more impressive ride than you ever imagined. The “fancier” the automobile, the more it depreciates over time. That’s why a car you couldn’t consider buying new becomes well within reach when it’s two or three years old.
During times like these, even with prices rising, a used car can be an aspirational purchase especially when a new one is completely out of reach.
Buy now or buy later? When it comes to preowned vehicles, there’s no time like the present.