Used-Car Prices Remain High, Making Buying a Challenge
Prices have finally begun to soften after a historic used-car price spike throughout much of 2021, but they remain higher than at any time before 2020, when the pandemic threw the global economy—and supply chains—into long-lasting turmoil. Rising interest rates have only added to the expense faced by buyers who have to finance, because they’ll end up paying more over the life of the loan.
Currently, the average price of a used car hovers around $27,000, with the average interest rate on a used car loan at 11.7 percent. You could wait for economic conditions to improve before buying a car, but not everyone has that luxury. If you need to buy a used car now, our expert advice and market insights from industry insiders can help guide you to the ones that offer the best value.
In good times and bad, Consumer Reports members can search our Used Car Marketplace for vehicles for sale in their area, sorting by the factors that matter most. The listings include CR reliability and owner satisfaction ratings, and there’s a free Carfax report for most of the vehicles. Members can also access ratings and information on used vehicles going as far back as 20 years.
Why Were Used-Car Prices So High to Begin With?
A lot of it comes down to the global microchip shortage and other supply chain disruptions that have plagued many industries since the dawn of the pandemic. Chips control everything in a car from infotainment screens to window motors. As manufacturers have scrambled to keep up with new-car demand, they have prioritized trucks, SUVs, and luxury models. Many automakers have even discontinued affordable entry-level models and sedans, pushing the average price of new cars past the $48,000 mark. And although used car prices are down 5.6 percent compared with a year ago—according to the July Consumer Price Index report—they still remain persistently high, along with most other consumer products.
Some analysts say the chip shortage is starting to ease, improving new-car availability. The chip shortage continues to be a problem, and production delays related to supply chain holdups are still commonplace, making things tricky for buyers.
“There are also reports of supply disruptions for a number of other components, including airbags and even the insulation mats that go under the hoods of vehicles,” says Sam Abuelsamid, an analyst with Guidehouse Insights, an auto industry analysis firm.