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Fortunately, those days are behind us.
In the years since, the bubble has burst but may still have further to fall.
High Interest Rates
Interest rates remain stubbornly high, and that poses a particular problem for used cars.
At the end of last month,Edmunds reportedthe average used car loan cost 11.4%.
TheFederal Reservelast pegged the average interest rate for used cars at 16.95%.
Melanie Musson, a car expert withCarInsurance.org, compares these rates to credit cards.
Most people would agree that its a bad idea to purchase a car with your credit card.
Car loans in general remain68% higherfrom five years ago.
But luckily, that isnt likely to last.
Waiting until 2025 could offer you muchcheaper financing options.
High but Declining Prices
Yes, used car prices shot to the moon in 2020 and 2021.
But theyve gradually floated back down to earth since, especially over the last year.
That marks the greatest deflation rate of any other major spending category.
The average used car cost $25,571 as of the end of July, according toCarEdge.com.
That figure may well continue to fall as prices continue to correct to more normal fundamentals.
Skyrocketing New Car Incentives and Inventory
Why have used car prices fallen so fast, beyond correcting bubble pricing?
In July, new car inventory hit 2.91 million in the US according toCox Automotive.
That marks a 52% jump from one year earlier.
That incentive rate has leapt 59.1% compared to a year ago.
In other words, dealers are desperate to sell new cars.
Buying cars in general is just not a great use of money.
Its a depreciating asset that most people use for 30 minutes to an hour per day.
Sure, you might be able to technically afford to buy a replacement car.
Every dollar you spend on car costs takes money away from the rest of your lifestyle.
Musson echoes that thought, highlighting the uncertainty thats hung like a fog over 2024.
Making a big purchase is a bad idea unless you absolutely must buy a car.
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