Used cars are not holding their value as well they did as a few years ago and will continue on a downward spiral.
A new study from Black Book, a new- and used-car valuation service, found that the value of 3-year-old cars is on the decline, thanks to more consumers trading in their autos to buy a new car.
“Despite the industry’s continued efforts to maintain a strong pace of sales on new cars and trucks, the increased level of supply in the used market has begun to weaken prices on both cars and trucks,” explains Anil Goyal, senior vice president of Automotive Valuation and Analytics.
Black Book found that the average value of a 3-year-old car is currently 52% of its original price as new, down from the high of 54.5% in 2013. The company forecasts that used cars will continue to be worth less over the next few years. It projects that in 2019 the average value of a 3-year-old car will be 47.8% of its new car price.
The decrease in value translates to significant lost dollars for consumers when they decide to sell or trade their car. On a $30,000 new car, for example, the loss would be $1,260.
Black Book says that used car values have been maintaining higher levels over the last 5 years, due to lower gas prices, continued demand for used cars and favorable credit for many consumers, leading to good auto loan interest rates.
If you are in the market for a new set of wheels, follow these Top 10 tips for buying the right new or used car in 2016.
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