The new car market is booming. Last year, car manufacturers sold nearly 17.5 million new cars in the U.S., breaking a record that stood for 15 years. If you were a manufacturer or dealer, 2015 was a very good year for you.
And what about 2016? Well, predictions are just that educated guesses, but most experts are thinking this year might be just as good or even better than last year, with things finally starting to slow down a bit in 2017. That’s a LOT of new cars on the road.
So what does all of this have to do with the used car market? A lot, as it turns out.
Supply and Demand
If you don’t know the old theory about supply and demand, it basically says that if there is a large supply of something, and not as many people who want to buy it, then the price of that thing tends to go down.
This happens all the time. Whenever you see clothes on the clearance rack at the department store marked down to 60% off, it’s because they bought too many of those items and people just weren’t buying enough.
And this same theory works in used car sales, too.
Supply is Going Up, Demand is Soft
Interest rates are low and car loans are easy to get for most people, regardless of credit. Millions of people have taken advantage of this by buying or leasing new cars. But what happens to many of those new cars – especially the leased ones – in a couple of short years?
They become used cars for sale. And that’s a LOT of used cars hitting the market.
So supply is up. What about demand?
Well, as long as car loans are easy to come by, and as long as people can continue to afford to buy new cars (which they often can, because car loan terms are getting longer and longer just to keep payments low), the demand for used cars just won’t be as strong.
Used Car Deals for You
Take all of this together and what it means is that if you’re the type of person who would rather not take the depreciation hit from a new car purchase, and if you don’t mind having something just a few years older than brand new, then chances are you’ll have a lot more options and good deals on a used car for the foreseeable future.
All you need is a car loan, and we’ve got you covered there.