Used cars compared to new cars often do not have the most sterling of reputations. The various nicknames for used cars are representative of their status: clunker, lemon, wreck, jalopy, etc. Despite the fact that most Americans would prefer a new car, Forbes reports that “Over the last few years, the used car market has demonstrated a significant growth in value contributing to the larger share of the overall market value in dollar terms.” Additionally, used cars are getting increasingly more expensive.
An Edmunds report has shown that Americans widely prefer new cars to used. The data shows that 43% of car buyers said they would only consider new cars, 24% would only consider used, and 30% were open to both options. Despite the demand for new cars, the used car market is significantly larger than the new car segment. While 17.5 million new cars were sold in 2015, the used car market sees nearly 42 million sales annually.
One of the major reasons Americans continue to buy used cars, despite their preference for new, is the astronomical rise of new car prices. A recent study has found that the average new car is out of reach for the average American, making the purchase of a used car a necessity. Unfortunately, used cars do not always offer an affordable alternative. According to Forbes “In the first quarter, the average price for a used car stood at $18,838, maintaining that trend could push the average price for a used unit to $20,000 by the end of the year.” It is clear that affordable transportation options are becoming increasingly rare.
Not only are used car prices rising, but there are also hidden costs to consider when purchasing a used car. New car purchases typically include a comfortable warranty should the vehicle require any maintenance. Used cars, however, offer far less in terms of guaranteed performance. Additionally, newer vehicles are becoming increasingly more fuel efficient. Driving an efficient new vehicle can save thousands of dollars over the life of that vehicle.
The Cheat Sheet believes that “The road to financial ruin is paved with expensive cars.” As the average American can no longer afford a new car, they are being forced to buy increasingly expensive used cars and used car prices look to be on the rise. Affordable transportation options are becoming exceedingly rare, and there has never been a better time to seek an affordable, new alternative that better satisfies today’s transportation needs.