Why are used cars so expensive?
Used cars have been considered a budget-friendly option for those looking to purchase a car for years. However, since 2020, the market for used cars has experienced a significant increase in demand and prices. Since cars typically depreciate over time, this trend seems at odds with everything we’ve come to expect with the second-hand car market, so let’s take a look at the reasons why used cars are now so expensive.
1. Shortage of New Cars
One of the biggest reasons is the shortage of new cars in the market. The COVID-19 pandemic caused significant disruptions to the global supply chain, affecting the production of new cars. This scarcity of new cars in the market created a surge in demand for used cars, and it’s this supply and demand imbalance that’s driven up the prices of used cars significantly.
Then there’s the issue of a global shortage of semiconductor chips. Many modern cars rely heavily on these chips for things like infotainment systems and driver assistance technologies, and the shortage of these chips has caused a delay in the production of new cars. As a result, many buyers are turning to the used car market, further driving up the demand and prices of used cars.
While it’s true that used car prices are high, this also means that part exchange prices are also at record highs, so get a quote today… you may be surprised just how much you can get for your trusty old motor!
2. Increase in Demand for Personal Transportation
The pandemic also contributed to an increase in demand for personal transportation, which has further boosted the demand for used cars. When the risk of infection from mingling with others was extremely high, many people opted to start driving rather than use public transport.
This trend put additional pressure on the limited supply of used cars, leading to further price increases. You also have to factor in that many people are moving out of the city to suburban or rural areas, which means they have to drive to work. This shift in lifestyle has definitely influenced the demand for affordable cars and driven up their prices.
If you now find yourself working remotely and don’t need your car anymore (or you could share one with a partner), there’s no better time than now to sell it. With prices at all-time highs, you could make a tidy sum by selling your car to BigWantsYourCar – find out how much by taking advantage of our free quote today.
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3. Improved Quality of Used Cars
Modern cars are designed to last longer and require less maintenance than older models, so people are willing to pay more for a used car that has been well-maintained. Moreover, the availability of reliable online marketplaces and car history reports makes it easier for buyers to research and identify high-quality used cars, which drives up the prices of these vehicles.
But we also need to factor in the increasing popularity of certified pre-owned (CPO) programs. Offered by car manufacturers, these programs offer buyers a warranty and other perks, such as free maintenance and roadside assistance, for a used car that meets specific criteria. These programs assure buyers that they purchase a high-quality used car, which justifies the higher prices.
Of course, the flip side to this is if you’re thinking of selling your car, its specs are likely to be much higher than the used cars of even a decade ago. With creature comforts like air-con, DAB radio, infotainment systems and keyless entry now standard on many cars, your chances of getting a high price for your car are greatly increased.
4. Government Stimulus Programs
The government stimulus programs introduced in response to the COVID-19 pandemic also played a role in the rising prices of used cars. The stimulus packages provided cash payments to individuals and businesses, which many people used to purchase used cars.
5. Low-Interest Rates and Easy Financing
Low-interest rates and easy financing a few years ago also contributed to the increase in demand for used cars. With interest rates at historic lows, many people took advantage of this opportunity to buy a car. The availability of easy financing options, such as longer loan terms and lower down payments, made it easier for people to afford a car, especially used ones.
Paying for used cars on finance instead of buying them outright is a trend that further increased the demand for used cars and made it more challenging for buyers to find affordable options. Although interest rates have been climbing steadily across the board over the last 6-12 months in the industry, they are still at relatively low levels based on historical data, which means that your car could be worth more than you think on the second-hand market. Get a free quote from BigWantsYourCar today to find out how much your car is really worth.
How much is your used car worth?
Despite the tendency for cars to depreciate over time, the market for used cars has experienced a significant increase in demand and prices over the past few years. As we’ve seen, there are many reasons for this, but we may be coming to the end of this anomaly. Global supply chains are slowly returning to normal and with the UK economy not being at its strongest at the moment, people are choosing to sell their cars to help fund other bills.
If you’re wanting to sell your car then you should pop your registration number into our valuation bar to get a FREE quote. Your quote is guaranteed for 7 days and, providing the condition of your car matches the description that you give us, we’ll collect it and you’ll have the money in the bank as soon as you hand over your keys. BigWantsYourCar, so take advantage of these high prices for your used car while you still can.