Consumers Can Lower Car Payments by Trading in for a New Car, Edmunds.com Advises
SANTA MONICA, Calif. — November 29, 2010 — Consumers driving three-year-old cars have the opportunity to get a lower monthly car payment by buying a new car, thanks to a downward trend in interest rates and an increase in used car values.
According to the analysts at Edmunds.com, the premier online resource for automotive information, trade-in values for three-year-old cars were up 10.3 percent in October 2010 compared to October 2007, while interest rates on 60-month auto loans have declined from an average of 7.4 percent in October 2007 to 4.7 percent in October 2010.
Edmunds.com Analyst Ivan Drury pointed out, "By taking advantage of these unusual market conditions, consumers who purchased cars three years ago may be able to get top dollar for their trade-in, lower their monthly payments and get a new car — all at the same time."
A consumer who has a five-year $25,000 car loan at the average interest rate in October 2007 will spend $4,985 in interest while the current average rate would generate an interest charge of just $3,101. This reduces the monthly payment from $499.76 to $468.35. A consumer who qualifies for cut-rate financing would save even more. At the 1.9 percent interest rate that is being widely offered by automakers today, a qualified buyer with a $25,000 car loan will spend just $1,226 in interest, bringing the monthly payment to $437.10 per month. Consumers can crunch their own numbers using the free Edmunds.com auto loan calculator at http://beta.edmunds.com/apps/calc/CalculatorController?pmtcalAction=basic_calc.
"It is a terrific time to sell a used car since they are in high demand right now," noted Edmunds.com Analyst Joe Spina. "That is especially true for cars that are three years old and newer since they often qualify for automakers' certified pre-owned vehicle programs, making them quite valuable to dealers who can sell them for a premium after certifying them."
Many new cars are actually less expensive than some one-year-old used cars. See a complete list at http://beta.edmunds.com/industry-car-news/new-vs-used-car-buying.html.
For more car-buying tips, read Ten Steps to Buying a New Car at http://beta.edmunds.com/advice/buying/articles/78386/article.html.
The following three-year old vehicles are among those that lead their segments in average True Market Value® price increases since October of last year.
|Average Used True Market Value®|
|Model||October 2010||October 2009||Change|
The chart below lists year-over-year used car price increases by vehicle segment.
|Average Used True Market Value®|
|Segment||October 2010||October 2009||Change|
About Edmunds.com, Inc. (http://www.edmunds.com/help/about/index.html)
Edmunds.com Inc. publishes Web sites that empower, engage and educate automotive consumers, enthusiasts and insiders. Edmunds.com, the premier online resource for automotive information, launched in 1995 as the first automotive information Web site and hosts the most established automotive community online. Its mobile site, accessible from any smartphone at www.edmunds.com, makes car pricing and other research tools available for car shoppers at dealerships and otherwise on the go. InsideLine.com is the most-read automotive enthusiast Web site. Its mobile site, accessible from any smartphone at www.insideline.com, features the wireless Web's highest quality car photos and videos. AutoObserver.com provides insightful automotive industry commentary and analysis. Edmunds.com Inc. is headquartered in Santa Monica, California, and maintains a satellite office in suburban Detroit. Follow Edmunds.com on Twitter@edmunds and fan Edmunds.com on Facebook at http://www.facebook.com/edmunds.