Used-Car Prices Have Fallen, for Now
Prices have dropped over the past year, although high interest rates remain a challenge for buyers who finance
Used car prices have improved, but interest rates remain high and there looms potential impact from a tumultuous new-car market, depending on potential changes to regulations and tariffs in the year ahead. We reached out to industry experts for insights into what is going on now with used cars. Here’s what you need to know:
The used-car market is less volatile than it was only a few years ago. While prices have come down, the cost for buying a used car is still significant because interest rates remain high. The average price of a used car has fallen 3.3 percent over the last year, according to the latest consumer price index report from the federal Bureau of Labor Statistics. However, the average loan rate for a used car was just over 12 percent in 2024, according to Experian, a data analytics and consumer credit reporting company. This adds to the expense faced by buyers who have to finance, because they’ll end up paying more over the life of the loan.
Other Ways to Make the Best of the Current Used-Car Market
Consider buying a new car. If you have to borrow money to buy a car, remember that the older the car, the higher the interest rate charged by the lender. New car buyers with good credit can benefit from the manufacturer-subsidized financing offered on some brand-new models. Ryan says some manufacturers are offering 0 percent financing deals again, many of them for new EVs. And with new cars, there’s also the added benefit of a fresh factory warranty.
The average price of a new car is about $49,000, which isn’t far off a record high. Ryan says that this has slowed sales, though, which means there are incentives and deals to be found among high-inventory models. Which models those are, exactly, can change from week to week, so CR recommends looking at manufacturer and dealership websites to find out if there are any current incentives on the models that interest you.
Look at older models. Used-car prices have dropped 3 percent on average over the past year, according to the consumer price index. However, pricing on older cars has seen a sharper decline. Ryan says that prices on 4- to 7-year-old used cars are down 15 percent, to an average of $23,351, and 8- to 13-year-old cars are down 19 percent, to an average of $15,615.
If you decide to buy an older car, Consumer Reports recommends looking at models known for reliability. Vehicles more than 5 or 6 years old aren’t likely to be covered by a factory warranty anymore (although many EVs have 10-year battery and powertrain warranties). You can purchase an extended warranty or service plan, but it’s usually better to set that money aside for possible use on future repairs instead. The downside is that if you have to finance the purchase, interest rates tend to be higher on loans for older cars—but at least you will have less to finance.
Best Used SUVs, Sedans, Small Cars, and Minivans of 2025
These top models—all tested by CR’s experts—should suit all budgets.
Shop used EVs. Ryan says automakers built more EVs than consumers ended up wanting over the past few years, so you may find competitive pricing on used models that are still covered by a factory warranty. The best deals, though, may be found among used Teslas, which Ryan says are selling for 13 percent less on average than they were a year ago. “The Model S is down 9 percent to an average of $31,962, and the Model 3 is down 19 percent to an average of $24,264,” he says.
Our experts say that often great prices can be a signal, such as reliability concerns with certain Teslas. Always look at reliability and other key data before committing to a purchase.
Prearrange financing. Figure out your budget and get financing based on what you can afford to pay monthly and as a down payment. It’s always a good idea to secure financing through your bank or credit union before going to a dealership to look at cars. That way you have a baseline you can compare against dealer financing offers, which may or may not be as good a deal.
As always, setting up financing for a private-party sale is a little more difficult. You’ll need to have the funds secured and ready to pay out so that you can buy a car quickly if you find one that is reliable, fuel-efficient, and meets your other needs.
Cast a wide net. Prices outside your area may be better. You can find a good variety of used models on websites like TrueCar, operated by a CR partner, and through Consumer Reports’ Used Car Marketplace. Expand your geographic search if you need to. Be cautious about searching too far from home, though. You want to be able to go see any car you’re considering buying and test-drive it before signing a sales or leasing contract. This is especially true for used cars. And you don’t want the car to get scooped up while you’re traveling to see it.
Do your research. Whether buying new or used, consult Consumer Reports’ road tests and ratings, looking closely at reliability, owner satisfaction, and safety. Make a short list of contenders to test-drive, and have a good understanding of the various trim versions and available features. Print out information on the models you’re interested in from CR.org and manufacturer websites to take along with you.
Buy something reliable. If you can’t find a newer used car within your price range (including financing), you may find yourself looking at older models that you wouldn’t otherwise have considered. CR recommends taking any used car to a reputable mechanic to have it inspected before buying it. (If the owner or dealer balks at this request, you may be better off looking elsewhere.) You can also consult CR’s predicted reliability scores to make sure you buy something that’s not likely to give you problems later.
Be willing to compromise. If you have to buy an older car, some of the features you want—whether advanced safety and driver assistance features or connectivity—might not be available. Decide which are absolute must-haves, and be flexible on the rest. Do prioritize safety, comfort, efficiency, and reliability because satisfaction with those may mean you’re happy to keep the car longer. As always, you’re more likely to find deals among less sought-after models like small sedans and front-wheel-drive SUVs, while larger SUVs and pickups tend to sell more quickly and be more expensive.
Don’t borrow too much. Put as much money into a down payment as you can afford. This is good advice in any economic climate. Maximizing your down payment will reduce the amount you have to pay in interest on the rest and minimize the chance that you’ll be left hanging with more debt than equity as your aging car’s value sinks over the years.
For example, if you have to borrow $15,000 for a used SUV that will be worth less than $10,000 in a year or two, you may end up “underwater,” or owing more than the car is worth, especially with the average interest rate on a used-car loan at more than 12 percent. If you crash the car or if it’s stolen, you’ll still have to make payments, even though you no longer have the car. Cars are depreciating assets in the best of times, but they’re likely to depreciate much more quickly if used-car prices fall further.
