The Prices of Used Cars Are Steadily On the Rise Despite the Economic Downfall- The Full Scoop
The global economy is rapidly going downhill. Everyone is experiencing a financial crisis. But did you know, in these desolate times, the value of your used car has just spiked? If you are on board to offload your used car, now is a perfect time. Your used car can be sold off for about $2000 more than the price it would have received in pre-corona times.
Sounds puzzling right? There are many reasons for this surprising revaluation of your old car.
Why has your old car garnered new respect?
Cars, like every other commodity in the market, are valued based on demand and supply. The short answer to why your car’s price is hiking can be evaluated by looking at its demand and supply. After the spread of the epidemic, the supply of cars has greatly shrunk, and though the demand has now risen significantly, the collective situation is enough to pull up the prices.
1. The supply of new cars is greatly disrupted
The supply of cars has suffered a strong break due to factory closures and trade cessation across international borders. Fewer new cars are reaching the market for sale.
2. Fewer sellers of old cars
The used car market is supplied by people willing to purchase newer models of cars. However, due to the pandemic, the purchasing power of many consumers has suffered a severe blow which means there are fewer people selling their old car to welcome a new vehicle. In fact, according to the New York Times, many car dealers are posting ads for people to get their old cars registered for selling. Clearly, the market for used cars is running dry due to a lack of sellers
3. The low-interest rate is fueling car mortgage
The banks are offering a low-interest rate as a stimulus for increased spending. This means people are grabbing onto this opportunity to get themselves a personal mode of transport. This is an increasing demand for all kinds of cars.
4. The coronavirus has undermined the importance of public transport.
The chance of contracting the contagious disease has discouraged many people from hiking on the public bus. They are looking for a cheap car to facilitate their transport. Hence, these people are rapidly lodging demand for used cars and hiking up prices.
Jessica Caldwell, executive director of insights at the automotive research site, Edmunds, delivers good news for buyers looking for a cheap deal. At the turn of the year, the prices will reduce because all the car models in the market will experience a depreciation as newer models of cars infiltrate the market.
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