Used car prices experienced one of the largest drops in history in June 2023. With supply chains getting back on track, new vehicle production is normalizing, and used cars are once again emerging as the practical, cost-effective choice for getting from point A to point B, as endorsed by financial advisors like Dave Ramsey.

When it comes to buying used cars, there’s a wide range of options to explore. Whether you're browsing platforms like Craigslist for an older bargain or opting for a certified pre-owned (CPO) vehicle from a dealership, it’s essential to weigh all factors carefully. A CPO car offers many of the advantages of a new vehicle, but at a much lower price. Typically, CPO cars are recently off-lease vehicles—about two to three years old, with lower mileage—and come with the added benefit of a warranty, offering peace of mind to buyers. Plus, because dealerships sell them, securing financing is straightforward, though interest rates may be slightly higher compared to new car loans.

There are also dedicated used car retailers, such as Carvana and DriveTime, that specialize solely in pre-owned vehicles. DriveTime, for example, boasts a 99% approval rate for car buyers, even for those with poor credit, making car ownership more accessible. Carvana also caters to individuals with bad credit, requiring a minimum annual income of just $5,100.

For those looking to save even more, buying directly from a car owner via used car websites can be a good option. This route can help you snag a deal if the previous owner took care of their vehicle, though it can be a bit more complex. You’ll either need to pay in cash or arrange financing in advance through a bank or credit union. Since direct sales don't usually include financing options like dealerships do, this adds an extra step. Additionally, hiring a mechanic for a “pre-purchase inspection” is highly recommended to ensure the vehicle is worth the price—something you wouldn't need to do with a CPO vehicle.

The most popular used cars tend to mirror the best-selling new vehicles in recent years. Choosing a reliable model with lower mileage is often the most cost-effective approach to car ownership, as long as you ensure the vehicle hasn’t been neglected. Unsurprisingly, pickup trucks dominate the used car market. The Ford F-150, Chevy Silverado, and Ram 1500 hold the top three spots for used vehicle sales. Among SUVs, the Chevrolet Equinox leads, followed by the Nissan Rogue, Toyota RAV4, Ford Escape, and Jeep Grand Cherokee.

A quick search of used car listings reveals many available options. For instance, there are 164 Chevy Silverados from model years 2019 to 2022, with under 45,000 miles and no accidents, priced below $30,000. Similarly, 62 Ford F-150s and 242 Ram 1500s fit the same criteria. In the SUV category, 210 Chevrolet Equinox models are available under $20,000, and you can find 149 Nissan Altimas for less than $20,000 as well. For under $25,000, there are 347 Honda CR-Vs, while Toyota Mirai models with less than 45,000 miles can be found for under $10,000. In fact, there are over 6,000 listings for used cars under $10,000 with fewer than 75,000 miles and clean titles. If you're on a tight budget, there are even options under $2,500.

Before making a purchase, it’s crucial to carefully evaluate different vehicle types and explore all available financing options. With the wealth of information available online, it’s easier than ever to do your research before heading out to inspect the car in person. Doing your homework beforehand ensures you make an informed decision and get the best deal possible.

Frequently Asked Questions (FAQ)

1. Why are used car prices dropping?
-The decline in used car prices is largely due to the stabilization of vehicle supply chains and an increase in new car production. As more new cars become available, the demand for used cars decreases, leading to lower prices.

2. How can I find the best deals on used cars?
-You can find great deals by searching online marketplaces, checking with local dealerships, and keeping an eye on promotions or sales events. Also, consider certified pre-owned (CPO) vehicles for added security and warranties.

3. Are used cars still reliable?
-Yes, many used cars are highly reliable, especially if they’ve been well-maintained or come with a CPO warranty. You can also check vehicle history reports and have a trusted mechanic inspect the car before purchasing.

4. What are the benefits of buying a used car over a new one?
-Buying a used car typically saves you money upfront and avoids the steep depreciation that new cars face in their first few years. You can often find well-maintained, recent models with modern features for a fraction of the cost of a new car.

5. Should I buy from a private seller or a dealership?
-Both options have advantages. Private sellers may offer lower prices, but dealerships often provide added benefits like warranties, financing options, and CPO programs. It's important to weigh the pros and cons of each based on your needs.