How the Cash for Clunkers Program has Affected used Car Prices
Since the end of the Clash for Clunkers program, there has been a shortage of used vehicles across the nation. The vehicles from the program are disabled and crushed, eliminating them from the used car market. This has caused a decrease in the amount of used car inventory in the United States, thereby increasing the prices of used vehicles.Below are some tips about when you should and shouldn't be looking to buy a used car.Used Vehicle Prices SkyrocketAccording to the September 2009 Manheim Report (http://www.manheimconsulting.com/Used_Vehicle_Value_Index/Current_Monthly_Index.html), used car vehicle prices have hit a record-breaking high of 118.5, the largest valuation of used vehicles since its inception in January 1995. This number is simply a value that tells when used cars are valued higher than they should be, creating substantial profits for used car dealers.Increase in Demand for Used VehiclesIncrease in demand for used cars across the nation is also due to production plants and dealerships of the Big 3 (Ford, Chrysler, & GM) closing. This has caused a reduction of new car supply and an increase in new car dealerships converting to used car dealerships.These used car dealers are then scrambling for used car inventory and outbidding the average consumer at auction. As a result, the demand for used cars has increased. The increase in demand for used cars may also be simply due to the fact that consumers are willing to sacrifice style and slick looks for practicality, reliability and economy during tough financial times.When to Buy a Used VehicleYou should wait six or seven months to buy a used car, if you can hold out, until the economy stabilizes and the Big 3 (Ford, Chrysler, & GM) get their footing in the new car market by creating products that consumers want. You should also watch the Manheim Index monthly to observe the trend of used car prices. When the index reaches below 100.0, it is time to buy the used car that you need as the demand for used cars will be less and prices will be better.Buying at this price point in the index gives the consumer the upper hand in used car buying negotiations. Above all else, remember to keep a level head when shopping for a used car, no matter what the market. Never become so attached to a vehicle that you can't walk away, and also be sure to negotiate and ask for a lower price. If you aren't embarrassed by the offer, it isn't low enough!
