SANTA MONICA, CA — October 1, 2021 — Consumers are paying more than ever to finance used vehicle purchases as tighter inventory and fewer discounts in the new car market push shoppers to seek alternatives in the used market. According to the car shopping experts at Edmunds, in Q3 2021:
- The average monthly payment for used vehicles is expected to climb to $500 for the first time on record compared to $473 in Q2 2021 and $420 in Q3 2020.
- The average monthly payment for new vehicles is expected to cross the $600 threshold for the first time ever, climbing to $614 compared to $586 in Q2 2021 and $568 in Q3 2020.
- The average monthly payment for used vehicles is just 18% less than the average monthly payment for new, which marks the lowest difference between new and used payments that Edmunds has on record.
- The average transaction price for used purchases is also expected to climb to a record high of $27,306, compared to $25,854 in Q2 2021 and $21,697 in Q3 2020.
"Just when we thought we'd see a cooldown in used vehicle prices, they roared back in September, creating a bit of a roller coaster in the third quarter," said Jessica Caldwell, Edmunds' executive director of insights. "These high prices combined with higher interest rates on the used side have shrunk the difference between new and used monthly payments more than we've ever seen before. Consumers considering a used vehicle rightfully might pause at the fact that today's used monthly payment is nearly the same as a new monthly payment five years ago — particularly when they factor in the maintenance that might happen sooner rather than later."
Edmunds experts note that used purchase conditions are likely to continue to be unfavorable for car shoppers through the rest of the year and advise consumers who need to make a car purchase to consider alternatives such as leasing or exploring certified pre-owned (CPO) vehicles.
"Leasing might offer cheaper monthly payments, and since a lease is a much shorter commitment than a purchase, you can explore makes or models that you might not have considered previously," said Ivan Drury, Edmunds' senior manager of insights. "If you have your heart set on used, it's worth doing some additional research into CPO options. Although they might seem pricier than other used vehicles at first glance, you're more likely to get a subsidized interest rate, and can have a bit more peace of mind as these vehicles come with a warranty and are generally newer with lower mileage."
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Edmunds guides car shoppers online from research to purchase. With in-depth reviews of every new vehicle, shopping tips from an in-house team of experts, plus a wealth of consumer and automotive market insights, Edmunds helps millions of shoppers each month select, price and buy a car with confidence. Regarded as one of America's best workplaces by Fortune and Great Place to Work, Edmunds is based in Santa Monica, California, and has a satellite office in Detroit, Michigan. Follow us on Twitter, Facebook and Instagram.