SAN JOSE (CBS SF) — Looking for a used car? Get ready for sticker shock. According to car-research website Edmunds.com, the average price of a used car in the U.S. rose nearly three percent in the last year to an all-time high of $19,367.
But the site says there are still some bargains out there, particularly if you’re willing to think small. Prices on subcompact cars are down more than six percent.READ MORE: Early Morning Earthquake Cluster Rattles Central Coast
One big reason for the rise in average car prices is the large number of formerly leased cars that are now coming onto the market. In other words, the average used car is younger and has more extras than it used to.
“We have so many off lease, near new vehicles, entering the market. Overall average, it’s the highest it’s ever been,” according to Ivan Drury of Edmunds.com. And newer, well-maintained cars can fetch more money.
Edmunds.com says it used to be one in 4.5 cars were leased. Now, that ratio is one in three.
“It’s making it very easy for consumers who are like, ‘You know what? I don’t want to spend the bucks on a new car, I want a near-new used vehicle,'” Drury told Consumerwatch.READ MORE: Oakland Police Intensify Sideshow Crackdown As Violence Escalates
And that sentiment was evident recently at a Hertz Dealership in San Jose, where former rental cars were selling briskly for the asking price with no haggling allowed.
The trend is also driving up prices at so-called “Buy Here, Pay Here” dealerships around the Bay Area. There simply aren’t enough older, cheaper cars to satisfy lower end demand, so Drury says they, too, can charge more.
“It’s kind of a two-fold effect, it strips out that supply at the bottom end,” Drury said.
Another factor is the influx of subprime car loans. Drury says the more money new car buyers can qualify for, the more car dealers can charge.
“Customers that are financially challenged, they can get a car now,” Drury explained.MORE NEWS: Johnson & Johnson Vaccine Shipments Could Arrive As Soon As Monday
But downsizing can pay off. Edmunds.com found subcompacts and compacts are among the biggest bargains available. Prices on those are down 6.3 percent and 2 percent respectively. And Drury says there’s also a wide selection available.