Last week, I began researching used cars and reached out to several dealers.

Shortly after, I received emails from these dealers informing me of impending price increases. Curious about this development, I looked into used car price trends and discovered a significant spike.

I'm now wondering about the current state of the used car market. Given these circumstances, should I wait to make a purchase, or should I act as soon as possible?

Used car price trends

I've been car shopping around Austin for the past month and the used car market makes zero sense right now.

I'm looking at a 2024 Honda Civic Sport with around 20,000 miles and dealers here want $26,000 to $28,000 for it. A brand new 2026 Honda Civic Sport at the dealerships on I-35 is listed at $27,790.

So I'm paying basically the same price for a car that someone else already drove for a year.

But here's where it gets really weird. Used car loan rates right now are averaging 10% to 12% APR. New car loans are running 6% to 7% and some manufacturers are doing promotional rates between 2% and 4%. Over five years that interest rate difference adds thousands of dollars even if the sticker price is identical.

Plus with new you get the full warranty, no mystery about how the previous owner treated it, and all the latest safety tech. When did this whole thing flip around?

I always heard you should buy a car that's two to three years old to avoid the depreciation hit. But right now used inventory is still tight from the pandemic, prices haven't crashed like everyone predicted, new cars have way better financing because dealers are trying to move inventory, and manufacturers are actually incentivizing new purchases with rebates.

My father keeps telling me never buy new but he bought his last car in 2015 when the market was completely different. Used was actually cheaper back then and interest rates were pretty similar between new and used.

I'm also seeing certified pre-owned cars that end up being more expensive than new once you factor in the interest rate difference over the loan term. Used EVs are depreciating fast which could be an option but then I worry about charging infrastructure and whether the battery will last.

What are people actually doing right now? Is the old advice to buy used basically dead for 2026? Should I just get new while the financing deals are good or wait and hope the market corrects? This all feels completely backwards.

Thinking about trading in my current car since due to the vehicle shortage its value has shot up several thousand dollars, and minus what I owe I can potentially have a good amount to put toward the down-payment of my next vehicle. On the flip side, cars I will be looking at will also have higher price tag for the same reason.

Is there any site where I can search for a vehicle and find what the average list price or sale price was maybe 6-8 months ago? It would definitely help as a reference point for negotiations.