New to Used

One of the signs of a difficult economy is that more people who in the past would only buy a new car are turning to used cars.
Demand for used cars is up significantly and supply is down. As a result, used car prices are up about 16 percent from about a year ago.
What's driving this trend?
Well, a lot of folks will point the finger at Cash for Clunkers and there's something there. But the bigger picture is more about the economy as a whole, drops in residual values, and the tightness of credit. There's kind of a interesting cycle here with fewer people buying new car resulting in fewer trade ins at a time when used car demand is high. The used car market is also feeling a tightness in leasing, with fewer cars coming off leases because companies haven't been leasing as much as they had in the past. Then there's the credit issue. Getting a hefty loan, even if you have good credit, might be tough because lenders want to be sure you'll have the money to pay them back down the road.
What does this mean to car buyers?
Well, if you have a decent car to trade in, you might get more for it when you decide to buy a new car. As for used cars, South Florida dealers are seeing supplies increasing slightly and demand waning so that should lead to prices falling. If you can hold out, you might want to wait until after the holidays, when there might be more trade-ins available.