Today I noticed a few weird noises/handling issues with my car. This has happened more times over the last year than at any other time of my ownership. It may be time to seriously look at replacing my 1999 Ford Escort. I know the $500 currently in my “car savings” isn’t going to cut it, but I looked around online a bit at cars anyways. Previously I looked at the best used cars available for under $10,000. Now, at this point, $10k is under my budget, so I think I need a new list…but that’s not the point here. As I was looking at used cars I was struck by the fact that some models went quite as affordable as I had remembered them being just a few months ago.
As I looked around online, I came across a recent release from Kelley Blue Book. Kelley Blue Book reported that used car prices “have been increasing across nearly all segments.” Kelley Blue Book brought particular notice to the increase in the value of fuel-efficient cars. Apparently, the prices of used fuel-efficient cars are up nearly 20% since January. So instead of depreciating, these used cars are actually appreciating.
This report basically confirms what I was thinking. As consumers in general look to cut their debt back they’re less likely to take on new debt to purchase a new car. Believe it or not, there are people out there who assumed that making a car payment was a necessity to life. As people buy fewer new cars, you would expect to see more activity in the used car market, which we would expect to increase prices. The additional increase in the value of fuel-efficient cars is to be expected with the increase in the price of gas in 2011. These combined factors make for a hot used car market.
So what does this mean for you? Well, as the market becomes unbalanced, it will make sense for some of you to throw out the idea of purchasing a used car, and you should consider springing for a new car. As I briefly touched on in a previous article, there are some instances, particular with lower priced vehicles, where buying a new car makes more sense than buying used. In its release, Kelley Blue Book points out that in April 2008, a three year-old (2005 model) Honda Civic was going for $8,700. In April 2011, a three year-old (2008 model) Honda Civic was going for $12,200. With a new 2012 Honda Civic running you $17k new using Truecar.com it’s definitely worth considering the benefits of purchasing and owning a new car over a used car (if you have the cash to pay for it).