How to get a sweeter deal on a used car
Used-car deals are getting better. Desirable trade-ins and vehicles at the end of their lease are streaming onto the used market, and that means more choices at lower prices.
New-car leasing and finance deals create competition with used cars, too, and that also helps drive down used-car prices, according to Laurence Dixon, senior manager of market intelligence at www.NADAguides.com.
Look to luxury cars
Some vehicle categories are riper for a deal than others. Right now, you’ll find the best prices on luxury models.
Leasing of luxury cars didn’t decline with the economy, so a steady supply of off-lease luxury vehicles has headed to used-car lots. Plus, luxury vehicles typically lose more of their value more quickly than mainstream models do.
Prices are also coming down on small and midsize cars. Midsize cars are the most popular models, and sell the most in the new-car market. As a result, midsize prices are falling a little more than prices in the used market as a whole.
The same goes for compact and subcompact models, but prices are even better. As the fuel economy of midsize models has risen and gas prices have leveled off, small cars (and hybrids) have lost some of their cachet.
Prices of crossovers and SUVs are a mixed bag. Many buyers of compact crossovers choose used, so high demand is propping up used prices.
Traditional, truck-based SUV sales have increased as fuel costs have leveled off, so prices for those vehicles are holding steady. But as buyers move back to truck-based models, larger crossovers are less in demand, and prices are down.
Consider leased or rental cars
Even if prices haven’t dropped across the board for the type of car you’re considering, there are ways to find a deal in any segment. Look at models that are most often leased, or ones purchased by car rental companies.
For example, a high percentage of leases are written for entry-level luxury cars, such as the BMW 3 series, Mercedes-Benz C-Class and Audi A4. The Toyota Prius and Camry, the Ford Focus and Fusion, and the Chevrolet Cruze and Malibu are often found in rental fleets.
And look for recently redesigned models. With a new-generation model on the market, there’s an inherent discount on the previous version.
Don’t limit your search to go-to brands, such as Honda and Toyota. The improving quality of all vehicles means you can cast a wider net.
Keith Griffin, the used-car expert at About.com, suggests looking at Korean carmakers Hyundai and Kia. They have five-year/60,000 mile new-car warranties, and used-car buyers get the remainder of that time. (Their 10-year/100,000-mile power train warranties do not transfer to new owners.)
Jessica Anderson is an associate editor at Kiplinger’s Personal Finance magazine.
© 2014 Kiplinger’s Personal Finance; Distributed by Tribune Content Agency, LLC.