Will Used Car Prices Come Down in 2024?
Written by
Terence Loose
Edited by
Nicholas Morine
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If you’ve considered buying a used car or truck in the past few years, you’ve likely faced sticker shock. Beginning during the pandemic, and stemming from new car supply chain disruptions, the demand for used cars skyrocketed. With a simultaneous slowing of the supply of used vehicles, prices soared. Unfortunately, the imbalance and elevated prices plagued buyers well after the pandemic officially ended.
However, according to some pundits and data, the used car market might finally be turning the corner and returning to normalcy. Or at least a new normal.
Used Car Prices Could Drop By As Much As 14%
The good news is that there is consensus among some authoritative sources that used car prices will fall during 2024. The less-inspiring news is they differ on how much that will be. For instance, Jonathan Banks, J.D. Power vice president of product development and valuation services, told Automotive News in February that he expected used car prices to fall by 5.7% in 2024.
On the other hand, Kevin Roberts, CarGuru director of industry insights and analytics, told Money he expected a “decline of about 14% for used models.” But don’t expect to find a smoking deal. As prices rose so much in the past few years, even robust drops will have difficulty offsetting them.
Interest Rates Kill Some of the Savings
Unless you plan to pay in cash for your used vehicle, the current high interest rates on auto loans might wipe out a lot of the savings you’ll gain through recent price drops. With auto loan rates anywhere between 6% and 21%, depending on your credit score and other factors (per MarketWatch), financing remains expensive.
Unfortunately, according to the Associated Press, the Federal Reserve has signaled that they would not be lowering interest rates until they had “greater confidence” that inflation was easing. Translation: Interest rates might not come down for a while.
Don’t Expect Pre-COVID Pricing
The pandemic’s adverse effect on the used car market seems to be chronic. For instance, during the J.D. Power Auto Summit in early 2024, Banks told the attendees that despite the price drops in the used car market, consumers are still paying 20% more than in 2021.
According to CarGuru, consumers might see a new baseline price of $24,700 for used vehicles in 2024. That’s up from $20,500 in the first quarter of 2020. In addition, the used vehicle market showed a 46% decline in cars priced under $10,000 — and those cars had, on average, 10.4% more miles on them.
The Bottom Line
While used car prices are expected to come down this year, finding an affordable car and a low-interest rate loan will require more work than in the pre-pandemic days. But with this seemingly being the “new normal,” there might not be much reason to wait any longer.
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