The $30k Used Car

The average price paid for a new car is now just shy of $52,000 – so it’s not really surprising to hear that the average price paid for a used car is now more than $30,000 (a new post “COVID” high). The latter figure sounds almost affordable – relative to the former figure.

Used car prices are of course tied to the prices paid for new cars. A new car that cost $52k when it was new will lose about $20k of its original purchase price in depreciation over just a couple of years; hence the $30k used car. When new cars sold for $30k, after three or four years, there were used cars available for $15k or so. Relatively new, low-mileage used cars. In other words used cars that weren’t high-miles, ten-plus-year-old beaters. Which is what the same money buys today.

A personal example will perhaps serve to make the point. Back in 2007, I bought my 2002 Nissan Frontier for $7,500 – which was about half what it stickered for when it was new five years prior. So it was only about five years old when I bought it and had about 50,000 miles. It looked new and it functioned as-new, since 50,000 miles on a vehicle made in the early-mid 2000s is something like a 25-year-old person in that life is only just beginning. I still have the ’02 Frontier and drive it regularly. I was able to pay cash for it back in ’07 because $7,500 isn’t really that much money, in terms of buying vehicles. It used to be pretty commonplace for people – not just rich people – to pay cash for a good used vehicle, like my ’02 Frontier was back in 2007. Today, something comparable – in comparable condition – would cost as much as a brand-new Frontier cost in 2002 because there is nothing available that’s new like my old Frontier that costs less than around $32k brand-new.

Have you checked out what used late-model Frontiers and Tacomas and Rangers are selling for?

What I spent to buy my ’02 Frontier used in ’07 with low miles and in excellent condition and only five years old would perhaps get you something comparable to what my ’02 Frontier is today – which is 25 years old (almost) and with another 100,000 miles on the odometer. That’s low miles for a 25-year-old truck and mine still looks pretty good and everything still works, which is why it’s still worth about to-thirds what I paid for it back in ’07.

But I hope I have made my point.

It takes more like $10k on the low end and realistically more to get a used vehicle in 2026 that isn’t a beater; i.e., one that can be driven as it is, that probably isn’t going to need major repairs right away. This puts people who are not pretty affluent (only pretty affluent people can generally come up with $10-15k in cash to buy a good used vehicle) or pretty handy with a wrench in a spot. Those with fix ’em-up skills can still buy beaters that need a new clutch or transmission or major brake work and get them fixed and roadworthy again for manageable money. But people who haven’t got fix ’em up skills – or the money to buy a good used car that isn’t going to need fixing up – will probably have to get a loan to buy a decent used car.

The average interest rate on a used car loan is right now is just shy of 12 percent, according to Experian. That’s about twice what it costs to finance a new car (about 6.5 percent). The reason for disparity is that used cars are used cars; they’re worth less already – and that means a higher risk of the lender ending up owing more than the car is worth, sooner. (It takes longer for a new car to depreciate enough to be worth less than the balance still due on the loan.)

The used car buyer’s monthly payment often ends up being higher than what it used to cost to finance a new car. And he’s driving a beater.

Salt in the wound is that the beater is probably no longer covered by its factory bumper-to-bumper warranty, or soon won’t be. This places heavy pressure on beater buyers – if they aren’t fix ’em-up types – to spend (to borrow) even more money, for that “peace-of-mind” extended warranty coverage.

It’s not just that new cars are becoming the indulgences of the affluent. It is also that used cars are becoming indulgences for the rest of us. The multi-pronged effort to get most of us out of cars altogether is working. If current trends continue trending, owning a car – new or used – will soon be something like what it was more than 100 years ago, when cars were luxuries that only a few were able to afford. Freedom of movement was not for the masses.

A return to that state has been the goal for at least the past 50 years – using “safety” and “the environment” (lately, the “climate”) as the pretextual excuses.

Why? Because the people who run things don’t like it that we who do not run things have been able to own and drive cars not-too-similar to the ones they have. A Bentley is a quarter-million dollar car. But a $25k Hyundai’s climate control AC works just as well – and now it even has huge touchscreens, too.

This is intolerable.

Also that the masses – that’s us – have had the kind of free-range mobility that was in former times a luxury. This detracts from its exclusivity and it also means crowds in places where those who run things go and they do not like crowds anymore than we do. The difference being they have the power (and the desire) to thin out the crowds that get in the way of their enjoyment.

It’ll be a lot more enjoyable for them when the average cost of a used car is $50k – which it’s likely to be a lot sooner than it took for it to get to $30k.

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