Why Used Car Buyers are Opting for Newer, More Expensive Models
If there is one thing that has held consistently true for the automotive marketplace over the past several decades, it’s that drivers want the newest and best car that they can afford. From buying brand new models straight from the manufacturer every four to five years, to leasing the newest option available every other year, to buying the newest used cars they can get their hands on – American drivers are scrambling to get what they perceive to be the best vehicle on the market. Thanks to a nationwide growth in new car leasing in recent years, used car buyers are more easily able to get their hands on the wheel of newer used models than ever before. In 2016, the pre-owned car marketplace has seen an uptick in the amount buyers are spending on used cars. Dayton, Cincinnati, Columbus, and the tri-state area is no exception to this rule, and it has caused a major boost in an otherwise stagnant economy.
How New Car Leases Benefit Used Car Buyers
A vehicle lease is one of the most popular ways to drive home in a brand new car, and also the more affordable option over buying outright. In case you do not have personal experience with an automotive lease, or are unsure of the process, let me briefly explain how they work. When car shoppers opt for a lease over buying a new car, they will make monthly payments based on the vehicle’s depreciation, residual value, and any acquisition fees charged by the dealership. On the contrary, new car buyers end up making monthly payments with calculated interest rates and based on the amount they negotiate with the dealership. Drivers who lease a new car only pay for the part of the vehicle they use for the duration of the lease agreement, and not for the car in its entirety. Lease agreements set mileage restrictions, so that at the end of the term, the vehicle has fewer miles than used cars from the same model year.
In most recent years, leasing has increased in popularity across the country exponentially. In 2014, new car leasing hit an all-time high and has continued to remain steady ever since. Most signed lease agreements are between two and three years in length, which is great news for used car buyers this year and next. The National Automotive Dealers Association reported that they expect around 800,000 extra used vehicles to hit the marketplace by the end of 2017, as a result of 2014 lease agreements coming to an end. The same report projects used car prices to fall by 2.5% in the next year, thanks to the surge of used vehicles becoming available. The NADA report explains it this way, “The expanding pool of used vehicle supply, spearheaded by off-lease growth, will gradually compress used vehicle prices as time passes. Under this assumption, prices would be at their lowest point since 2010.”
Used Buyers Want Newer Used Cars
On top of the upcoming surge of used cars becoming available in the United States, another interesting trend is taking place. Used car buyers are spending more on their used cars than they ever have before. In fact, 2015 set a surprising record for nationwide used car sale prices, with the average hovering right around $18,600.
The reasoning behind the increase in used car sales does not have to do as much with price increases, as it does with consumer demand. Used car shoppers are looking for newer used cars, and they are paying a premium in order to get what they want. Edmunds.com reported that over half of used cars that were sold in 2015 were less than three years old, further cementing the fact that used car buyers want new(er) models. It shouldn’t come as a total surprise that this younger generation of used car shoppers want newer pre-owned vehicles, especially considering the reputation for needing the latest and greatest that Millennials are so adamant to honor in their daily lives.
The increase in newer used cars hitting dealerships this year also hints at the fact that buyers are more responsibly sticking to their budgets. Lower mileage used vehicles may carry higher sticker prices than higher mileage models, but they are still thousands cheaper than their brand new counterparts. Used car buyers likely still feel the urge to buy new, but they seem to be practicing conservative restraint when it comes down to finalizing their vehicle purchase. A brand new 2017 Chevy Malibu LS for example, carries an MSRP of $24,100, while a gently used 2016 Malibu LS features an average sticker price of $17,000 with only 10,000 miles on the odometer. The value for the price could not be any better, and this is just one small example of the many low mileage, lower-cost used cars available at dealerships right now.
Don’t Spend More Than You Should
The used car marketplace is thriving right now. Thanks to the swell of used cars becoming available after expired lease agreements, now is a great time to find a newer, more affordable used car. Before you head down to a dealership to find great deals on used cars, be sure to do your research. Websites such as KBB.com are exceptional resources to discover a vehicle’s actual market value, and can prove to be invaluable when it comes time to make a deal on the used car you want to buy. The age of the internet not only allows car shoppers to find the true value of the used car they want, but it also opens the door to incredible web-based car buying services like online.cars. With so many newer used cars becoming available in the next year, online.cars is the best way to ensure you find the exact car you want, at a price that can’t be beat. The revolutionary car buying service has access to a database of over 100,000 new and used cars from across the nation, and is a hassle-free way to secure the low-mileage used car you have been hoping to find.
Take full advantage of the shifting used car market, by utilizing online.cars for your next used vehicle purchase.