$30,000 for a used car? That’s the new average.

NickD said:

Pete. (l33t FS) said:

z31maniac said:

STM317 said:

Interesting bullet points from the article:

"Last month, the average used vehicle price was 63% of the average new vehicle cost. Before the pandemic, it was 54%."

"What used to be a $5,000 car,” the car dealer said, “is now $8,000. What used to be $8,000 is now $11,000 or $12,000.”

"Including taxes, fees, a 10% down payment, and an interest rate of around 7.5%, the average used vehicle now costs $520 a month, even when financed for the average of nearly six years"

"Monthly payments for the average used vehicle, he noted, were $413 two years ago, $382 five years ago and $365 a decade ago. The November average payment of $500-plus for a used vehicle, Drury said, is about the average that was needed five years ago for a brand-new vehicle."

I'm shocked about the 7.5% rate on used vehicles. That seems crazy to me. 

Crazy good or crazy bad?

I know someone who usually bought used cars at 29% interest.  Makes the WRX that I put on a 19% credit card look sane.

My father recently found paperwork for a used '77 Buick Regal he bought around '79-'80 when he and my mother first got married, and it was a 24.99% interest rate. He looked at the interest rate and his eyes popped out of his head and he said he doesn't even recall batting an eye at that interest rate back then.

Given the prime rate varied between 11.0% and 21.5% in 1979-1980, 24.99% might not have been that bad.   For comparison, the current prime rate is 3.25%.

Yeah, I meant crazy bad. 

But as I'm nearly 40, I'm less willing to make bad financial decisions around vehicles. 

Mr_Asa said:

In reply to Adrian_Thompson (Forum Supporter) :

Insurance? Actually making someone whole on a claim?  LOL.

No kidding. My daily driver 2002 Camry got side swiped the other week. Driver door is caved and needs replacement, but with used car prices so high I'm hoping they opt to fix it rather than total the car. I don't want to be car shopping right now, no way I can replace the car for the pittance it would be totaled for.

Very unfortunate for most people. Glad to stick to my 800$ beater while waiting it out. If you can afford a new car, it seems to be the way to go. A lot of people are doing custom orders for a small percentage under invoice on certain vehicles.

Mr_Asa said:

In reply to Adrian_Thompson (Forum Supporter) :

Insurance? Actually making someone whole on a claim?  LOL.

Luckily I've only had a car totaled once, and TBH I was delighted with what they offered, as have been most people I've personally met in that situation.  Now, house claims.  Eff em.  We had to get legal for my father in law after some damage to his place a few years ago.  All I will say is that what we finally got was over 30 times (yes, not a typo THIRTY TIMES) what they were trying to fob off a guy in his mid 80's with.  But that just adds to my belief that USAA is basically a criminal organization.

Sold my year-old Veloster N back to the dealership for a couple thousand more than I'd paid, then got a good trade for my wife's 2018 Forester on a 2022 Ascent Onyx at MSRP.  Then found a running Mazda2 backup/project car for $3400.  So not the worst...

This goes back to something I've been thinking about recently.  The utter BS of 'financial advice' columns, articles and people.  With their utterly ridiculous 'your car should not cost more than 10% of your salary' BS.  Per there terms the average household buying a USED car should have an income of over $300K, and pushing %500k for a new car at this point.

And before people jump in with their tails of running $800 cars for $2.37 a year in maintenance, that's simply not feasible for the majority of people.  Especially once a car is say 10 years old and gets towards the time where things like timing belts, water pumps etc. have to be changed.  It doesn't take much at all to get a $2k repair estimate for a 100K service on a 'normal' non enthusiast grocery getter.

Used car prices are indeed nutty.  I blame dealers (not in a bad way).  Imagine being a dealer in this market and not being able to get new cars to sell, but still having a monthly nut to pay for the location, people, insurance, etc?  Only way you can do it is to increase used cars sales.  Like every other dealer is doing.  So, they're driving up the auction prices to just to get inventory to sell.  And because used cars are scarce, they're dropping the criteria of what they probably normally sell (older vehicles or higher mileage), just to make ends meet.

I was gobsmacked the other day when I thought about shopping for a newer truck.  Hit up CarMax just to see what's around.  Currently, the 4th cheapest truck across the entire nation they have is a 2011 Ford Ranger XL with 112k miles at $19,998.  That's MORE than what the truck cost new 11 years ago. 

Ooof..

-Rob

z31maniac said:

Yeah, I meant crazy bad. 

But as I'm nearly 40, I'm less willing to make bad financial decisions around vehicles. 

The person who regularly bought at 29% did so in his 60s to 80s.

His credit was awful in part because his "financial advisor" told him to refi his house every year, and he was financially skilled enough to believe that.

You can even get outstanding prices for cars selling to places.  A guy in the office just sold his 4-5 year old Mustang GT to ZOOM for $37K, he's sitting on the money and ordering a C8.  Then the engine started sounding bad on his 07 Jeep.  So he sold that too them too for $13,700 for a 135k mile 07 2 door Wrangler ASAP.  He's leased a crappy Fraud EcoSport, we tease him its a young girl college car, but it was cheap to lease for two years as basic transportation until this all settles down.

John Welsh said:

I know its bragging but in early Covid, May 2020, I bought a 2019 Dodge Grand Caravan GT w/40k miles for $15.1k directly from Hertz as they were fire-selling off cars quickly on the eve of their bankruptcy filing.  At the time Avis & Enterprise was not fire-selling and they were priced just over $18k.  

Now:  

Hertz: 2019 GT with 76k miles at $25k

Avis: 2020 GT with 51k miles at $31.6k

Enterprise: 2019 GT with 59k miles at $28.5k

 

These number astound me.  Sure I bought at the bottom but now I don't even have 60k miles on  my van and it retails now for $10 - 13k more!!  I wish I had bought 5 of these vans!  

 

 

Damn. I should sell my minivan...

In reply to cmcgregor (Forum Supporter) :

I think that too, but buy what?  I'd have to sell it for $25k just to then be able to afford a replacement van. 

John Welsh said:

In reply to cmcgregor (Forum Supporter) :

I think that too, but buy what?  I'd have to sell it for $25k just to then be able to afford a replacement van. 

Agreed, that's the issue.  If you need a car and sell yours because they're throwing money at you for it, what do you replace it with?  Whatever it is, you'll end up paying more than it's probably worth and maybe negating the profit on the one you sold. 

Same thing with houses around here.  I could sell mine (in theory) for 3 times what I owe on it.  SWMBO was excited about that, until I showed her that we'd spend all of that money, basically, buying the same house.  And, I don't want to move out of the area because I'm concerned the current WFH trend won't last and would hate to be stuck in a small town trying to find a high tech job.

-Rob

We could make it another year driving the camper van and Honda Fit. It would make moving all the street parked vehicles for street sweeping a little simpler, too!

In reply to rob_lewis :

That friend of mine who sold his Taco and bought an H3? He's a Realtor(TM). He keeps going on about how much you can sell your house for so you should list it. But then I'd have to replace it, and I don't want to live in the equivalent of an H3 :)

Makes me buying the FR-S in 2015 brand new seem downright sane. SWMBO dodged an even bigger bullet getting the Tucson late in 2019.

Makes me happy I didn't wait,  and spent 10% under MSRP in May for a new Sportage. I ended up with brand new then for the same price as an average used car now. 

Adrian_Thompson (Forum Supporter) said:

This goes back to something I've been thinking about recently.  The utter BS of 'financial advice' columns, articles and people.  With their utterly ridiculous 'your car should not cost more than 10% of your salary' BS.  Per there terms the average household buying a USED car should have an income of over $300K, and pushing %500k for a new car at this point.

And before people jump in with their tails of running $800 cars for $2.37 a year in maintenance, that's simply not feasible for the majority of people.  Especially once a car is say 10 years old and gets towards the time where things like timing belts, water pumps etc. have to be changed.  It doesn't take much at all to get a $2k repair estimate for a 100K service on a 'normal' non enthusiast grocery getter.

The "Rule of Thumb" for cars is based on monthly payment, monthly take home pay (after taxes) not total price and annual income. It's not as bad as it seems on the surface. It works out to 300-400/mo depending on actual taxes for the median household income of $67k.

STM317 said:

Adrian_Thompson (Forum Supporter) said:

This goes back to something I've been thinking about recently.  The utter BS of 'financial advice' columns, articles and people.  With their utterly ridiculous 'your car should not cost more than 10% of your salary' BS.  Per there terms the average household buying a USED car should have an income of over $300K, and pushing %500k for a new car at this point.

And before people jump in with their tails of running $800 cars for $2.37 a year in maintenance, that's simply not feasible for the majority of people.  Especially once a car is say 10 years old and gets towards the time where things like timing belts, water pumps etc. have to be changed.  It doesn't take much at all to get a $2k repair estimate for a 100K service on a 'normal' non enthusiast grocery getter.

The "Rule of Thumb" for cars is based on monthly take home pay (after taxes) not total price and annual income. It's not as bad as it seems on the surface. It works out to 300-400/mo depending on actual taxes for the median household income of $67k.

All the same, many new car buyers in median-ish income brackets are not spending only $300-400/month, they're spending $800-900/month.

I tend to think $2k/year in deprecation and/or maintenance is the sweet spot and you don't need to rock 100k mile vehicles to do it.

*Almost* anyone currently buying a used vehicle is on crack. In the overwhelming majority of cases a vehicle is repairable.

I don't know what planet is is were you can make money buying a normal car, driving it around and then selling it but surely it isn't the one I live on (Earth). But nope, we are in some sort of crazy alternative universe. I brought a brand new company van for the first time in the biz' 40+ year history cuz buying used just didnt make any sense.

At least I hope I did. Ordered it beginning of last August and only recently got notification that they're gonna go ahead and build it. Rod Serling is gonna start monologing about this any time now...

Many of you guys know what I do for a living. For those that don't, I work in auto insurance claims. The amount of money I am paying out for total losses has skyrocketed. It's had a not so insignificant effect on our metrics.  I sometimes pay more for a very lightly used car than the equivalent new one.

Snrub said:

STM317 said:

Adrian_Thompson (Forum Supporter) said:

This goes back to something I've been thinking about recently.  The utter BS of 'financial advice' columns, articles and people.  With their utterly ridiculous 'your car should not cost more than 10% of your salary' BS.  Per there terms the average household buying a USED car should have an income of over $300K, and pushing %500k for a new car at this point.

And before people jump in with their tails of running $800 cars for $2.37 a year in maintenance, that's simply not feasible for the majority of people.  Especially once a car is say 10 years old and gets towards the time where things like timing belts, water pumps etc. have to be changed.  It doesn't take much at all to get a $2k repair estimate for a 100K service on a 'normal' non enthusiast grocery getter.

The "Rule of Thumb" for cars is based on monthly take home pay (after taxes) not total price and annual income. It's not as bad as it seems on the surface. It works out to 300-400/mo depending on actual taxes for the median household income of $67k.

All the same, many new car buyers in median-ish income brackets are not spending only $300-400/month, they're spending $800-900/month.

New car buyers are likely to have household incomes above the median.

Used car buyers have more variability in the price they pay. If they wanted to follow the rule they could, it just wouldn't be a 3 year old car coming off lease with 30k miles. In either case people can follow the rule, or ignore it. And we obviously know that many (most?) people don't care to follow these types of rules.

Jay_W said:

I don't know what planet is is were you can make money buying a normal car, driving it around and then selling it but surely it isn't the one I live on (Earth). But nope, we are in some sort of crazy alternative universe. I brought a brand new company van for the first time in the biz' 40+ year history cuz buying used just didnt make any sense.

You could pretty much do that in the early 90s driving Miatas in Canada. I had at least one friend who drove his - stock - for 3-4 years and sold it for what he paid new. They did NOT depreciate at that time in that country. Possibly because most of them were being shipped overseas. I was told by a Mazda rep that half of the 1996 (I think) cars were shipped out of country immediately. I know there were more yellow Canadian 1992s in the club in Marburg, Germany than there were in the Ottawa, Canada club.

In reply to Keith Tanner :

Interesting! What was the reason for that? Easier to import from Canada than the US?  I ass-ume that Canadian regs mostly align with US.

Sure makes buying a nice driver quality 'collector' car more appealing. I know most of the general populace wouldn't go that direction, but I'd pick up a nice 60s-80s vehicle and ride out this wave of insanity. Especially if I needed a truck. When this bubble bursts I wouldn't be holding title to something that will plummet in value.

But hey, I already bought my last DD. If I can make it last another 20 years I'll be happy.  (Clone to mine; not the actual car)

If I ever have to buy newer I'd probably just lease and replace every few years. The complexity of modern vehicles is not DIY friendly. Out-of-warranty repair costs simply won't justify ownership for someone like me north of age 55.