Economic factors brought on by the COVID-19 pandemic have resulted in higher-than-normal prices for vehicles.
According to vehicle valuation site Edmunds.com, new vehicle prices appear to be leveling off, but it's a very different story when it comes to used cars.
What Are Used Cars Worth Right Now?
"Used vehicle prices are unbelievably high right now," money expert Clark Howard says. And those who listen to Clark's podcast know that he has a strong affinity for used cars because of the money you could save compared to a new vehicle.
But used car prices are climbing. The average price for a used rose to $25,410 in the second quarter of 2021 from $22,977 in the first quarter, according to Edmunds.
That means there may be a real opportunity for car owners who want to capitalize on the used vehicle market by putting their cars up for sale.
Not every person who sells a used car, though, will make a profit. Read on to find out why.
How a Parked Car Could Mean Profit
Clark says he and his family have been big fans of minivans through the years. “ We kept the last one just over 10 years and bought a new one two years ago,” he says.
But Clark says it turned out his family wasn’t getting much use from the new vehicle. “We realized that we were putting virtually no miles on that minivan because our lives had changed,” Clark says. “The minivan had become irrelevant.”
Check Your Used Car’s Value Online
Clark said that's when he decided to use Edmunds.com's Online Appraisal Tool to see what his minivan was worth.
Once you enter information like your mileage, make, model and VIN, Edmunds will instantly send you an offer to buy your vehicle from CarMax or another online marketplace.
"So I go online to Edmunds.com to appraise my car and the appraisal, to my shock, comes out $2,000 higher than I'd paid for the minivan brand new two years before," Clark says.
Clark recommends that you compare prices on any potential purchase — or in this case, a potential sale — so that’s exactly what he did.
“I went on Carvana.com, and they offered more than what Edmunds said it was worth,” Clark says. “Then I went to CarMax, and they offered another $800 more than what Carvana said it was worth.”
So this might prompt you to wonder what your used vehicle is worth right now.
How Much Is My Used Car Worth Right Now?
Inspired by Clark’s success, I decided to run the numbers on my own vehicle to see what I could get for it.
- I plugged my car's information into Edmunds.com's Online Appraisal Tool.
- In a matter of seconds, I received an offer for my vehicle from CarMax.
While this was a little more than I expected, CarMax offered me several thousand dollars less than what I paid for the vehicle (which I bought used).
Also, because I own an electric car, I know that the resale value wouldn't be as strong due to the typical deterioration of their batteries over time.
But what about you? Use the Edmunds tool to find out if your current vehicle is worth more than it used to be.
Just like Clark, if you’ve got a vehicle just parked in a garage sitting idle day by day, you could be sitting on a nice little profit.
Even though some high-mileage vehicles are commanding prices 20-40% higher than they were a year ago, your car (like mine) may not be one of them.
To add some more perspective, Clark says he views his situation as “a one-time score” and that it worked out mainly because he didn’t need to replace the vehicle he sold.
"That's where the real opportunity is," he says. "Because if you have to replace a vehicle, you're nowhere. Because If you sell one at an inflated price, you have to buy one at an inflated price."
Here’s the bottom line:
If You’re Selling
If you have a used vehicle you don’t need, now’s a great time to test the market.
If You’re Buying
“The best advice I can give you in today’s car market is to wait,” he says.
“I know it’s an ugly market right now,” Clark says. “The best thing in an ugly market is that if what you have is working, keep driving it. The ugly will fade, and supply and demand will come back into balance.”
More Car Tips From Clark.com:
- This Simple Maintenance Schedule Will Make Your Car Last
- How To Save Money on Car Insurance
- Buying Gas From a Station on This List Is Better for Your Car