If you have been wanting to buy a second hand car but have been put off by spiraling prices, now might be the time to rethink and start looking for that vehicle you want.
It’s been well documented how prices of second hard cars jumped over the pandemic. Supply chain issues combined greater demand as people steered clear of public transport and went on local road tip holidays instead of going overseas.
There is now some research which shows that prices of second hand cars are on the way down. Moody’s Analytics research shows that second hand car prices in Australia have fallen for the fourth month in a row, and they are predicting that rising interest rates and a supply of new vehicles will continue the downwards pressure.
Used car prices fell 1.1% in September compared with August, and Moody’s has concluded that the market has “turned the corner on price increases.”
Even so, used car prices are still 14.6% higher than they were last year, and they are 62% higher than before the pandemic.
If you are wanting to buy a used car, however, all that is ancient history. What you need to know right now is that prices are coming down and are likely to continue to do so.
The Moody’s report also contains a warning for anyone wanting to buy a used car. Sure, prices might be on the way down but interest rates are on the way up.
This means that if you need finance to buy a car it will cost you more, and traditionally loans to buy cars have carried steeper interest rates than – for example – home mortgages.
A way to avoid this and get value in the market is to explore the idea of a lease with a final payout amount or – if you have some room on a home mortgage – to use that money to fund a car purchase.
It is likely that your mortgage rate will be at least one percentage point or more cheaper than any rate on a car loan, and you can consolidate that debt into what you owe on your property and pay it off over 25 years instead of five, which is typical for a car loan.
That way, you can take advantage of the fall in used car prices without being stung by the higher rates.
Another thing to consider if you’d like an electric car and have been put off by the prices is that there might soon be many more second hand EV’s for sale.
Two of the biggest barriers to buying EVs are supply and affordability, and Tasmania based The Good Car Company is doing something about this.
The company is about to begin importing second hand EV’s into Australia, sourcing them from other right hand drive markets such as the UK and Japan.
Prices for these EV’s are expected to start at around $20,000, which will make them much more affordable for many and comparable with many petrol driven vehicles.