Should I Buy a New or Used Car?

Believe it or not, now is a good time to buy a NEW car. This is because the price difference between new and used cars has sharply decreased in the past year. The price of new cars are up about 2%. Compare that to the price of used cars, which has increased about 10%. For example, the extra cost in buying a new Toyota Prius instead of a used one was a 48% increase in price, but now the cost increase is only 24%.

What as led to the narrowing of the price-gap between new and used cars? First, many Japanese car makers are offering increased new car deals, as they have been trying to get new car production to the number they were at before the devasting earthquake in Japan. Second, US car makers are trying to unload their stock of less fuel-efficient cars. Third, the supply of used cars has gone down which has led to a price increase of used cars. Supply of used cars is down due to people simply keeping their cars longer.

If you are considering buying a new car know that trade-in values for used cars are up-especially for newer, fuel-efficient cars. Where is the best place to trade-in your used car? Generally independant used car dealers will give you best value. Also, try going to a dealer of the brand of car your selling (not buying), as these dealers can resale your car more easily.