Back to Blogs

Why Used Car Prices Are So High After COVID

Avi Singh Jun 24, 2023

Why Used Car Prices Are So High After COVID

The used car market has been on fire for the past two years, with prices rising to record levels. There are a number of factors contributing to this, including the COVID-19 pandemic, the global chip shortage, and pent-up demand.

The COVID-19 pandemic

When the pandemic hit in early 2020, automakers were forced to shut down their factories for several weeks. This led to a sharp decrease in the supply of new cars, which in turn drove up prices in the used car market.

The global chip shortage

The global chip shortage has also played a role in the rising prices of used cars. The shortage has made it difficult for automakers to produce new cars, which has further decreased the supply of used cars on the market.

Pent-up demand

Another factor contributing to the high prices of used cars is pent-up demand. Many people who were planning to buy a new car in 2020 put their plans on hold due to the pandemic. However, as the economy has recovered, these people are now looking to buy cars, which is putting additional pressure on the used car market.

What does the future hold?

It is difficult to say when used car prices will start to come down. However, there are some signs that the market may be starting to stabilize. For example, the average price of a used car has fallen slightly in recent months.

It is also worth noting that the global chip shortage is expected to ease in the coming months. This could lead to an increase in the supply of new cars, which would help to bring down prices in the used car market.

Overall, it is likely that used car prices will remain high for the foreseeable future. However, there are some signs that the market may be starting to stabilize.

FAQ’s

Ask your questions to keep logs of unusually helpful
solutions they’ve shared with customers.

Yes you can do a no money down lease.

  • 1. Negotiating power: imotors have negotiated favorable terms with the car manufacturers or financing companies that allow them to offer low lease rates.
  • 2. Volume discounts: By leasing a large number of vehicles, imotors is able to secure volume discounts that translate into lower lease rates for their customers.
  • 3. Low overhead costs: imotors has lower overhead costs than traditional brick-and-mortar dealerships, such as lower rent, utilities, and staffing costs, which could allow them to pass those savings on to customers.
  • 4. Marketing promotions: imotors runs marketing promotions that temporarily lower their lease rates in order to attract customers and boost sales.

As you probably already know, lease contracts are not designed to be easily or inexpensively terminated before the normal end date. However, you do have a number of options available to you that could minimize your costs and headaches. Unfortunately, an adequate discussion of these options would be too lengthy to present here. A full discussion of all your lease termination options, including how to choose the right option for you, is contained in our article, Exit Your Lease Early.

It depends. If your current car is paid for, you can certainly use it as a trade-in. Just be sure you know its fair trade-in value, and that the dealer gives you full credit when your lease payments are calculated. If you still owe on your car, you will want to get the “payoff” from your finance company and compare that amount to the trade-in value of the car. If the trade-in value is higher, you have “trade equity.” If not, you’re “upside down” and you may want to reconsider. You know, too, that you would do better financially if you sold your car yourself.

Sales tax laws can be quite different between states and localities. Most states simply apply the local sales tax rate to each monthly lease payment. A few states want all sales tax paid up front, based on the value of the vehicle or the sum of all monthly payments.

Yes, but it’s a little different than for a loan. You always pay a finance fee, called money factor, on a car lease just as you pay a finance fee, called interest, on a car loan. Money factor is expressed as a very small number such as .00175 but can be converted to APR interest rate by multiplying by 2400. For example, a lease money factor of .00175 is equivalent to 4.2% APR interest rate. You pay finance fees on a car lease because leasing is a form of financing and the finance company wants to be paid for the use of their money. Leasing is not renting. The lease finance company uses their money to buy a vehicle from a dealer and leases it to you. By leasing, you essentially borrow the finance company’s money that was used to buy the car.

Our vision is to provide convenience
and help increase your sales business.

mail_outline sales@imotorsauto.com phone_android 516-340-6200
Quick Links
Community
Socials

©2023 imotors. All rights reserved