Daily Auto News Some New Cars Cheaper than Used
Daily Auto News
New car dealers, many facing the threat of bankruptcy, are discounting new cars to levels rarely before seen. New car prices are declining. Consumers, faced with an ongoing recession, are shopping for used cars when they are forced to shop for cars at all. Used car prices are rising.
The result?
Some used cars are now more expensive than brand new cars of the same make and model. “Consider this,” the AP reports, “The average cost of a used 2008 Honda Accord EX sedan, certified by the dealership, was $21,544 earlier this month, according to Edmunds.com, a car-buying Web site. A new 2009 model cost $80 less. It’s simple supply and demand. With new car sales at a 27-year low and desperate dealers piling on rebates and incentives, prices are plummeting. At the same time, demand is up for used cars and their values are rising.”
Finance rates are also reversed. The AP notes, “Automakers are subsidizing zero-percent or low-interest loans on new cars, while the average rate on a three-year used car loan is about 7.5 percent, according to Bankrate.com. Factor in the lower cost of financing and the total cost of the new car can be less.”
The phenomenon primarily affects cars with good fuel-economy and long-term reliability. The Detroit Free Press notes, “Used cars from model lines that don’t retain as much of their value – like big SUVs from U.S. brands – may be more appealing to people seeking cheap wheels than value-gripping choices like late-model Asian brands with better mileage.”
Of course, the New York Times reports, “there is a catch. Getting a new vehicle for less than a used one depends on the buyer’s being eligible for the lowest interest rate. That means having a good credit rating, which will eliminate plenty of people. Edmunds figured that only about 18 percent of consumers who bought vehicles last month were eligible for zero-percent financing.”
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