In America, there is a new hanky-panky with auto leasing which offers some unpredicted and unbelievable news to vehicle drivers who are looking for striking the best deal on buying a used car. An approaching saturation of cars which are at their lease’s end will dump thousands of used cars into the market within the next 2 years certainly reducing prices on low-mileage and old style cars with modern amenities. Americans saw an explosion of lease in initial half of this decade, and it is said to have hit an all-time high in 2014. Majority of the 2 and 3 year leases which were signed previously will start coming to the market adding almost 800,000 used cars in the market, says reports by the NADA (National Automotive Dealers Association).
Should drivers care about this sudden outbreak of used cars?
The burgeoning supply of used vehicles pioneered by growth in auto lease will probably compress the prices of used cars with the passage of time. As per this presumption, prices of used cars will reach their lowest level since 2010. This is indeed a fortunate report for all car drivers as the price on both used and new cars have multiplied off late, driven by record sales of cars throughout the nation. When the recession swept off the nation, the drivers kept their cars for a longer time thereby diminishing the total number of used cars, increasing prices between 2007 and 2014.
According to reports from Edmunds.com, the average prices of used cars set a maximum in 2015 at $18,700. This is driven by the flow of numerous cars at their lease’s end and dealers have been seen to have extended their pre-owned efforts of increasing sales. Consumers are more attracted towards CPO sales as these cars are blessed with benefits and warranties just like a new car. CPO sales have reportedly climbed 56% in the last 5 years.
What determines discounts while buying a used car?
Before you strike a deal with a used car loan lender, you must be eager to know whether or not there are better and reasonable deals available on new or used models. Prior to knowing whether discounts are available, you need to know what determines them.
On the perspective of used cars, discounts are related to how long the car has been a part of the dealer. Usually the pricing strategy offered least discounts on the initial 30 days a used car is kept in the lot, some potential discounts are offered for the second 30 days and huge ones between the 60th and the 90th day. On the other hand, with regards to new cars, the strategy is a bit different. A model of 2016 which arrives in 2015 June is still considered as a new car even during January, 2016 and hence you can well understand that there’s not much pressure to sell it off. However if that model still remains with the dealer when the models of 2017 start arriving, then there will be a huge pressure. New cars may even qualify for big discounts.
Vital things to consider when buying a used car
With choices galore, it may be difficult to find the right car according to their wish. Here is a list of steps that you can take before buying a used car in the market to ensure that you get the best one.
#1: Determine how much car you can afford
There’s a thumb rule which you need to follow. When you take out an auto loan, your payments shouldn’t exceed more than 20% of your take-home pay. In case you wish to stick to a tight budget, you might just even wish to spend less. As long as used cars are concerned, they will need a bit of extra attention, maintenance, new tires and such costs. Insurance and fuel are two ownership costs categories which shoppers often forget about.
#2: Jot down a list of targeted used cars
There is no doubt about the fact that Toyota company and Honda Accord make some effective used cars but at the same time they may cost you way more than those made by Kia Optima or Ford Fusion. So, in case you’re looking for some best ways of saving your dollars, make sure you consider multiple brands. Jot down a list of 3 cars which can meet your requirements and which also fall within your budget. You may seek help of reviews to achieve some useful information. CPO cars have warranties for a long period of time which are backed by car makers and not only the dealership that is selling the car to you.
#3: Take a close look at the prices of used cars
The prices of used cars are driven by the factor of where you’re buying the car from. You will most probably find sections of used-cars in new-car dealerships and you will also find individual used-car lots. The private party cars will have the lowest selling cost and the CPOs will undoubtedly be rated at the highest possible price. You can check out comparisons of car prices to know the average price that is paid for a car in the locality you stay.
#4: Check the history report of the vehicle
Unless you’re purchasing the car from a very close person or some family member who can claim the truth about its history, you should always get the vehicle history report and check it thoroughly. Remember that this is an essential step and if you see that the car you’re about to choose has a poor history report, you should measure your decisions.
Purchasing a used car is one of the greatest ways of cutting down your driving costs as new cars lose about 40% of their value within the first year of your driving. However, there are definitely certain risks too that are attached with buying used cars and hence it is better to use you head than your heart.