If you’re having trouble selling your used car it might be because fewer and fewer people can afford to buy it.
Trading in is no problem – other than the problem of getting wholesale value for your trade-in, which the dealer will then finance to someone else at full retail value. Plus interest.
But you – the private seller – probably do not want to finance the sale of your old car. You want cash, paid-in-full at the time the keys and title change hands. This is the way used cars have been sold between private parties for more than 100 years – until recent years. What’s changed is that something like one-third of Americans haven’t got the ability to pay cash for anything that costs more than three figures; for about half of the population, it’s a stretch to buy – as opposed to finance – a new refrigerator.
Used cars cost a lot more than a new ‘fridge – in part because of the cost of new cars, which is now well over $30,000 on average. That’s for a minivan or family crossover. 4WD trucks and SUVs routinely transact for $50,000.
Even with depreciation, these things still cost a lot more as used cars than most people can come up with in cash. That $30,000 minivan or crossover is still worth about $15,000 after five or six years and if you’ve tried to sell one recently, you already know how hard it is for people to come up with that kind of money.
You clean the vehicle up in your driveway; vacuum the interior and wax the finish. It looks great. It is great. Nothing wrong with it and many people would love to buy it. The problem is they can’t afford to – without financing it.
Because these people cannot afford to pay you, they end up paying more at a dealership, where they not only pay marked-up retail value for their new used vehicle but also interest on the loan they have to take out because they could not afford to pay you cash. Interest adds a lot of expense to the cost of a car but it adds even more expense to used cars because the lenders can make the borrowers pay it. They know they have them over the ol’ barrel. That if they want to drive it away, today – they’re gonna have to pay.
Ironically, the people who can’t afford to pay cash would have paid less – in interest – on a payment plan for a brand-new car. But they can’t afford the price of the new car.
Which demonstrates the axiom that people who can’t pay usually pay more than people who can pay. This is the “lay-away” or rent-to-own model, which was once upon a time the dynamic at seedy department stores in the not-so-great part of town, where the poor got the shaft – as they usually do.
But now everyone gets the shaft.
Because so many are stretched so thin, the person trying to sell his used car will probably end up trading it in instead – because he can’t find a buyer capable of buying it. This will cost him thousands of dollars, the difference in the wholesale value he gets for his trade-in and the marked-up full retail value his old vehicle will be sold – and financed for – by the dealer.
This is a measure of what the irresponsibility of the American volk (which consumes more than it earns) exacerbated by the policies of the American government (which has made everything it touches – which is everything – cost more than it should) have done to America.
Before the government got into the business of decreeing how cars will be built – and by dint of that, how much they will cost buyers – new cars cost a great deal less than they do now. That meant they cost less as used cars – and most people could afford to pay cash for them.
The decreeing got under full steam toward the end of the 1960s, so it’s instructive to look back and see what a typical family car cost brand-new just before then.
A 1965 Chevy Malibu – which was a full-size sedan that could carry six adults – stickered for just over $2,400 when it was new, a sum equivalent to just over $20,000 today. Which sum will buy you – just barely – a small sedan like a new Toyota Corolla that seats five adults, less comfortably. A current-year full-size sedan like a Dodge Charger – which is the least expensive example of its type currently available – stickers for $29,995, a sum equivalent in 1965 purchasing power to about $3,600 – which is a big difference in real cost.
It is of course true that the base ’65 Malibu was a spartan car in terms of amenities. You did not get AC or power windows for your $2,400 (much less six air bags, which you probably would not have wanted to pay for). The new Charger comes standard with all of that plus more.
But that’s precisely the difference now vs. then.
Before the government got into the car-decreeing bidness, basic cars were commonly available. You could buy more expensive cars with AC, power windows and so on- but you didn’t have to.
New – or used.
Today, you do – if you want to buy any car made within the past 15-20 years you have to buy a car with AC, power windows and much more. Including the much more added to the roster of standard equipment by the government, such as six (and often more) air bags. There is no low cost option.
Which raises costs for everyone.
It is why the cost of used cars is so high – and why more and more Americans can’t afford to buy (rather than finance) them.
. . .
Got a question about cars, Libertarian politics – or anything else? Click on the “ask Eric” link and send ’em in!
If you like what you’ve found here please consider supporting EPautos.
PS: Get an EPautos magnet or sticker or coaster in return for a $20 or more one-time donation or a $10 or more monthly recurring donation. (Please be sure to tell us you want a magnet or sticker or coaster – and also, provide an address, so we know where to mail the thing!)
My eBook about car buying (new and used) is also available for your favorite price – free! Click here. If that fails, email me at EPeters952@yahoo.com and I will send you a copy directly!