The reason why there aren’t many affordable used vehicles that aren’t ancient, high-miles beaters is because there aren’t many affordable new vehicles.
When a new vehicle that sold for $40,000 is four or five years old, it’s still going to be a $25,000 or so vehicle – which means it is too expensive for most people to be able to just buy – as opposed to going into hock, via financing. It’s a vicious Catch-22, too – because people who can’t afford the price of a new car are often stuck with the cost of a loan – at higher interest – on a used car. The lack of relatively new, low-miles used vehicles that can be bought outright has greatly undermined the ability of people who aren’t affluent to avoid being impoverished.
They can go into hock for the expensive used vehicle they can’t afford to just buy – or they can buy the high-miles, ancient beater that will likely hit them with unaffordable repair bills they’ll have to pay to keep the old beater going.
The much better alternative – a low-miles, just a few-years-old vehicle people could afford to buy outright – and so without going into hock – has been all-but-eliminated because inexpensive new vehicles have been all-but-eliminated. I’ll use trucks to make the point, because trucks used to cost less than most cars.
At least, there were trucks that cost less than most cars, while being more useful.
In the early 2000s, there were basic little trucks such as the ’02 Nissan Frontier that I still own, which I bought when it was about five years old and had about 50,000 miles. I was able to pay cash for my ’02 Frontier when I bought it used – because it didn’t cost much to buy it when it was new. The original MSRP for my truck back in 2002 was just over $13k – which is why, after five years had passed, I was able to buy it – in cash – in 2007 for about $7k. No payments to make other than the one I made – and for that one payment, I got myself a nice little truck that still looked like new when I bought it and drove like new, too. It needed nothing in the way of expensive repairs because a five-year-old truck with 50,000 miles is not an old beater truck and won’t be for years and miles to come.
Fast-forward to now and $7k might buy you a ten-year-old Frontier with 150,000 miles that is probably going to need major repairs in the near future because it is an old beater truck. This may be ok if you have the tools and skills to do those repairs yourself – and are ok with the possibility (the likelihood) of having to deal with such hassles regularly. Many people just want a reliable vehicle. This is understandable. The reasonable worry about buying a tired old beater with a lot of miles is why so many people go into hock to get a lower-miles, newer used vehicle that – they hope – isn’t going to start falling apart shortly after they drive it off the lot.
Today, there’s nothing new available like my old Frontier – or the other-brand small trucks it competed with, such as the Ford Ranger, the Toyota Tacoma and the Chevy Colorado/GMC Canyon. All of these trucks have gone on ‘roids and bulked up to about the same size that full-size trucks were when my ’02 Nissan was new. They all start around $33k, too – which is more than twice as much as the base price of my ’02 Nissan, when it was new. It is true, of course, that some of the doubling is inflationary. But the difficulty is that many people’s incomes haven’t inflated in congruence. Even leaving that aside, adjusted for inflation, the cost-equivalent of my $13k Frontier – when it was new – would be about $24k today, according to the government’s own inflation calculator.
That’s about $8,500 less than the base price of a 2027 Frontier ($32,490).
If there were new trucks on the market that listed for about $24k, after about five years there would be lots of low-miles used ones available for around $15k; after another two or three years, you’d probably be able to get one with under 100,00 miles for around $10k or even less. At that price point, many people could once again buy outright or at least not have to go into hock for much, for very long. Put say $5k down and maybe finance the balance.
The payments would be easy – and easy to pay off.
The other day, I wrote about Tiny Cars – and how these could be available right now, if the federal government would allow them to be available. Most of these sell – everywhere else – for about $15k or even less, brand new. After five years or so, they would sell for around $8k or so – a sum most people can afford – and they would still be only a few years old, with low miles and probably at least another ten years of problem-free life to go.
The existence of this option would have another salutary secondary effect. It would check the upward trajectory of new vehicle prices because there would be an alternative to having to pay them.
This probably explains why that alternative has been eliminated.
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