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December 2025 New Car Incentives
Are used car prices going down? Yes they are! But there are other factors at play in this conversation, all of which are covered here.
Are Used Car Prices Going Down?
Anyone who has been looking to buy a car over the last several years has surely noticed the high prices, especially in the used marketplace. But, as the COVID-19 pandemic has finally receded into background noise and the world has returned to relative normalcy, it begs the question, “Are used car prices going down?” The answer to that is a nuanced “Yes” as we’ll look at below.
Before the pandemic, the car market – new and used – was typically overflowing with supply. But that supply dropped off a cliff due to wide-ranging factors associated with the pandemic and demand drove prices up. Since then, it’s been a volatile car market in terms of pricing.
Additionally, used car prices are lower than at any point between 2022 and 2023. Granted, those numbers are still high compared to 2019, but it appears we’re out of the woods on big increases. Of course, there is more to this conversation than the sticker price of a used car. Interest rates, maintenance costs, and insurance premiums all contribute to the overall cost of owning a car.
Cheap Used Cars
Although used car prices are going down, the cars themselves are still relatively expensive. If for example, you’re hoping to score something at or below the $15,000 mark, supply is scarce. This is because automakers are building more expensive cars. Looking back 5 years, there were 36 models in the $25,000 price range. Today there are just 10, which means the used car market will continue to see relatively expensive options. There has been pushback from the dealers to the manufacturers on this, but it will take time for cheaper models to trickle into the market.
Interest Rates
If you’re taking out a loan to buy your next car, interest rates are the other half of the affordability equation. Last year, the Federal Reserve raised these rates to the highest point in over 2 decades as part of an effort to harness inflation. That helped with pushing car prices down but increased the interest rate on new auto loans.
The good news is that the Fed has signaled plans to start trimming those rates. It hasn’t happened yet, but if you can hold out on buying your next car, you may enjoy a lower interest rate towards the end of 2024.
Car Repair Costs on the Rise
Along with building pricier cars, automakers are stuffing their latest and greatest vehicles with more complex systems like turbochargers and all-wheel drive, modern materials like aluminum, and loads of modern sensors and computers.
All of which adds up to bigger bills when it comes to repairs. That is doubly true for accident-related repairs as modern cars and bigger and faster than ever before leading to more significant damages. Factor in the dearth of qualified mechanics and you can see how this aspect of keeping your used car on the road can become a real hassle.
Auto Insurance Premiums
You know who else is paying attention to all these automotive-related trends? The insurance companies. Just like your local shop that is charging you more to fix your ride, auto insurance companies are increasing premiums to keep pace with the increased cost of claims.
According to Kiplinger, car insurance rates have jumped 26% since just last year with an average annual premium of $2,543. The increase is even more pronounced versus 2022 when that average figure came in at $1,771.
How To Save On Buying a Car
So are used car prices going down? Yes. And are used car ownership costs going up? Also yes. So, what’s a person to do when they need or want to find a new ride? Well, it’s not all doom and gloom as there are several aspects of the car buying process that you can leverage in your favor.
Private Party vs Dealer Trade-In
Chances are, if you’re in the market for a new (to you) car, you’ve got a current vehicle that you’re looking to unload. Trading it in at a dealership is perhaps the easiest route, but also guaranteed to net you the least amount of money.
Going the private party route requires more effort and may take more time to complete. However, the financial upside can be significant versus a dealership trade-in, so it is worth considering.
Incentives Are Your Friend
Doing your research on the latest incentives is another way to reduce your bottom-line costs of buying a used car. Typically, incentives are better for new cars, but most every automaker has extensive used car programs and incentives, they just use fancier names like Certified Pre-Owned.
Cheaper Is Better
Also, don’t get sucked in by the glitz of high-end trim lines when shopping in the used car market. Going with a base model not only costs less upfront, but it also typically comes with lower auto insurance premiums for additional savings.
Long-Term Car Savings
Finally, once you’ve secured your latest car, be sure to stay on top of routine maintenance like oil changes and tire rotations. It’ll keep your vehicle running strong long-term, which is just one more way to keep your costs down when buying a used car.
