Looking for a Car? Edmunds Says the Deals are With Compact and Subcompact Cars
Prices of used compact and subcompact cars are down, and they offer the best value right now for used car shoppers, according to a new report released today by Edmunds.com, the leading car information and shopping network. The finding is one of a number of data-driven trends found in Edmunds’ Q1 2016 Used Vehicle Market Report, which delivers a wealth of insights into the forces driving the used car market.
According to the report, prices for used compact cars are down 1.5 percent and prices for used subcompact cars are down 5.7 percent year over year. The price movements stand in sharp contrast to overall used car prices, which are up 3.2 percent to a first-quarter record of $18,838 per vehicle. Edmunds analysts say all of these trends result from one overarching cause: America’s love affair with SUVs.
“Low gas prices and easy credit are making SUVs – and their higher price points — more appealing to used car shoppers, but they’re also creating a great opportunity for small car shoppers who now have a wider selection at lower prices,” says Edmunds.com Director of Industry Analysis Jessica Caldwell. “If you’re a used car shopper right now and your primary objective is to get a great deal, you’d be smart to consider a compact or subcompact car.”
Other key takeaways included in Edmunds Q1 2016 Used Vehicle Market Report include:
- Record Certified Pre-Owned Sales in Q1: Certified pre-owned (CPO) sales enjoyed a 5.2% lift in over Q1 2015 to a first quarter record of 646,390 sales. The trend underscores the exploding popularity of CPO vehicles, which are generally defined as used vehicles that have undergone a minimum 100-point inspections and are accompanied by manufacturer-backed warranties and may include other benefits such as free maintenance, 24/7 roadside assistance and low-APR financing.
- Credit Availability Mitigates High Prices: The spillover effect of higher vehicle values continues to drive average APRs lower and loan lengths higher. The average used vehicle loan term hit a record high 66.7 months, while the average interest rate on a used car loan in Q1 was 8.0 percent (down from 8.3 percent in Q1 last year).
- Used Car Payments Approaching Average Lease Payments: The average used car monthly payment is up 4.4 percent in the last three years, to $376/month. By comparison, the average new car lease payment is up 1.3 percent over the same period to $423/month. With only a $47 gap between average payments, shoppers now may be more willing to consider a new car lease over financing a used vehicle more than ever.
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