We have some good news if you are in the market for a used car this spring. But there's bad news if you are planning to trade in or sell your car.
It's all because used car prices are dropping for the first time in more than five years. Used car buyers know finding a good pre-owned car has been tough since the Great Recession.
Few people bought cars during the recession between 2008 and 2010, which means there are not a lot of those cars being traded in. The end result: high trade-in values and higher prices on used car lots.
But that all started to change in 2011, when shoppers, feeling more confident about their jobs, began buying new cars again. The confidence and increased sales continued throughout the next few years..
The result of that market improvement: the NADA Used Car Guide (which sets values for dealers) predicts used car prices will fall six percent this year, as 2013 lease trade-ins flood the market.
Consumers purchased a lot of cars in 2013, releasing years of pent up demand. Now, as those 2013 models get traded in (after a typical three-year lease), the prices on used car lots are starting to fall.
That also means your trade-in will bring less than it would have a few months ago.
But you shouldn't expect bargains on used pickups and SUVs. Trucks, crossovers and SUVs are red hot right now.
Most cars being traded in are small and midsize cars from a few years ago when gas was nearing $4 a gallon.
So, car lots are being flooded with trade-ins of small cars as their owners upgrade to the newest "cute ute" as a replacement.
If you were hoping for a great deal on a pickup truck or midsize crossover, you might say Doesn't That Stink? Those prices are still high due to high demand.
Still, if you hope to trade in your car, there's no need to panic. Sure, prices are down a small amount, but that should not be a deal breaker. In fact, if you have a crossover, a pickup, or another model that's in demand right now, some dealers may offer you a premium for it.
So ask around if you are not satisfied with what you are offered, so you don't waste your money.