SEARCHING FOR THE ELUSIVE $2K USED CAR
I remember when $2’000 used cars were a thing. They were for sale in front yards everywhere and in good shape too! Hey, for $3’500.00 – $5’000 you could drive away in something really nice with low miles! I get calls all the time from folks still hunting that savory deal and I wonder, is it gone for good? With the average cost of a used car peaking at over $22’000 last summer it’s time to make way for the new standard…
The average cost of a new car in 1990 was about $9’500. This means after the first year’s depreciation (20-30%) and subsequent year’s (16-18% annually) we might buy her used in 1995 for around $2’000.00 – $3’500.00. The average price of a new car in 2020… $37’000. Over the next 5 years that car will lose around 60% of its value. If you don’t have a calculator handy that puts the price at around $14’500.00 used. Something really nice with low miles will cost around $20’000. Those are the facts and there are a couple good reasons why.
Quality: New car quality has increased and is still rising, they simply last longer. They’re still kicking like a mule at eleven plus years. This means that a five year old car has a long life ahead of it and the owner knows it. It’s price will reflect its longevity.
Supply and demand: Used cars are scarce these days compared to the 90’s. What’s the best way to drive the price of a product… control sales. With less inventory on the market, there is less competition and this is powerful leverage for sellers.
Larger more expensive vehicles: Increased SUV, truck, and crossover sales in recent years has led to less small, inexpensive vehicles on the used market and less means more for sellers. Since you’re not likely to find many of them for sale, they’re come at a premium. If you do find an inexpensive used car in great shape, move fast, it won’t be available long!
Are there any cheap used cars out there worth buying?
Of course there are, just harder to find. Best bet is to purchase from family or close friends that can guarantee the car’s history. 150’000 plus miles is fine as long as the car has been properly maintained and loved. Otherwise it’s anyone’s guess how long the car will last. Dealers can’t sell what they don’t have and there are so few of these rare birds available that dealers can’t find them either. The discerning used car dealer has a reputation to protect and must have a reasonable amount of confidence in each used car they sell. Often times cheap is just cheap and that doesn’t meet inventory standards.
The New Standard
What should you expect to pay for a reliable, well maintained used car today? For the features that most of us want with 60-80k miles you can expect to pay on average around $14’000-$18’000 for your 4 to 5 year old used vehicle. Yes, there are exceptions both higher and lower depending on the car and condition specifics but buyer beware, if it’s cheap it’s a heap! Have questions? Call or text (757) 560-4252 and ask for Mike Love, I have answers. Happy hunting folks!
Frio, Dan “Cheapest Used Cars” EDMONDS.COM December 10th, 2019 Web. Retrieved from: https://www.edmunds.com/vehicles/cheapest-new-cars/
Edgerton, Jerry “Cars Now Last Longer Than Ever.. Will Yours” CBSNews.com August 7, 2015 Web. Retrieved from: https://www.cbsnews.com/news/cars-now-last-longer-than-ever-will-yours/
Mattone, James “Used Car Prices at Highest Levels in Three Years” media.thinknum.com August, 2019 Web. Retrieved from: Mahttps://media.thinknum.com/articles/used-car-prices-are-at-highest-levels/