Used Car Costs Have Dropped For Months — But They’re Still Way More Expensive In Some States Than Others
A new report shows that the price of used cars has dropped steadily for the past four months, but it's not resulting in much money saved.
The pandemic economy has turned everything upside down — including the skyrocketing cost of used cars. But if you’re in the market to purchase a used car, there might actually be some (tentatively) good news: A new report shows that the price of used cars has dropped steadily for the past four months. It’s a welcome reprieve from the escalating costs, driven by inflation and supply and demand.
But although things are trending in the right direction regarding cost, not all states are seeing the same price drops. In some states, purchasing a used car is pricier than in others. Here's what you need to know.
According to Money.com, the price of a used car is finally dropping, "but that doesn't necessarily mean it's a great time to buy." Citing data from the research firm Edmunds, the publication says the average price of a used car has dipped below $29,300 after a few months of dropping prices. However, although the price is down from the historically high average of $29,969 in Dec. 2021, it's not down by a lot.
"We're still very far away from what anyone who's ever bought a used car in the past will be able to relate to," says Ivan Drury, senior manager of insights at Edmunds, per Money.com.
Another big part of the puzzle of affordability is the rising interest rates on auto loans. As Money.com explains, interest rates for car loans hit 8.8% in July, which makes a typical monthly payment around $564. In July last year, when interest rates were a little lower at 7.5%, the average monthly payment was $502.
The publication lays this out, noting that in Dec. 2021, when used vehicle prices were at an all-time high, people were still paying less than what they pay now. "The typical monthly payment was actually $23 cheaper than it is now," Money.com says, thanks to interest rates.
However, it's also important to note that not every state is similarly experiencing the rising costs of a used car. According to iSeeCars.com’s latest analysis of more than 1.8 million used car sales in July, prices on used vehicles are up nearly 11% from last year, but that’s on average — and the range goes from less than 1% increase from last year to almost 17% in other states.
States where used car prices have jumped the most over the past year:
- South Carolina with a year-over-year change of 16.8% or $5,277
- New York with a year-over-year change of 15.8% or $4,595
- New Jersey Island with a year-over-year change of 15.2% or $4,486
- Connecticut with a year-over-year change of 14.3% or $4,138
- Massachusetts with a year-over-year change of 14.1% or $4,176
States where used car prices have jumped the least over the past year:
- Oklahoma with a year-over-year change of 0.8% or $278
- Alaska with a year-over-year change of 1.3% or $542
- Rhode Island with a year-over-year change of 3.4% or $1,038
- Hawaii with a year-over-year change of 5% or $1,562
- Mississippi with a year-over-year change of 5.1% or $1,663
To look at the full details of just how expensive a used car is in each state, including which vehicle is the most expensive in your state, check out iSeeCars.com.