The used-car market has an affordability problem

Affordable used cars are becoming harder to find, forcing budget-conscious shoppers to consider older vehicles with more miles, The New York Times reports. 

According to iSeeCars, the average three-year-old used car now costs about $33,000, while only one in nine three-year-old vehicles sells for less than $20,000, down from roughly half in 2019. Higher new-car prices, tariffs under the Trump administration, higher borrowing costs and increased demand for used vehicles have contributed to the shortage. 

Prices for used electric vehicles have also risen, partly as consumers look for relief from higher gas prices. Shoppers with $10,000 to $15,000 now typically get a car nearly nine years old with more than 98,000 miles, compared with a roughly five-year-old car with 58,000 miles in 2019. 

Experts advise buyers to prioritize safety and reliability, remain flexible about brands and act quickly because affordable vehicles sell quickly. They also suggest considering newer models from brands such as Kia, Hyundai and Nissan instead of focusing only on traditionally high-resale brands such as Toyota and Honda. 

Buyers should consider the full cost of ownership, including insurance, maintenance and fuel, rather than focusing only on monthly payments. The average used-car loan reached nearly $28,000 in the second quarter, with monthly payments averaging $542 and interest rates at 11.19%. Certified pre-owned vehicles and recently retired rental cars can provide additional options for shoppers seeking newer used vehicles. 

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