The price of used cars is falling. Here’s how experts say you can make the most of it

The past few years have been tough for used vehicle buyers due to higher prices, less inventory and rising interest rates. Compared to what people usually expect to pay from the used market, it's fair to say the market was underwhelming. But there appears to be at least a dim light at the end of the tunnel according to the latest Edmunds Used Vehicle Report.

Edmunds found the average transaction price for a used vehicle was $28,935 in the third quarter. While still well above the $20,085 average from about five years ago, it's down from last year's record high. Additionally, new vehicle prices continue to rise, making used vehicles more attractive to buyers on a tighter budget. Generally speaking, the difference in average price between new and used is back to where it was in 2019. However, it is still wise for prospective used vehicle buyers to make sure they are getting the best value for money. The experts at Edmunds have put together six important tips to help you with your next purchase.

COMPARE PRICES TO AVOID OVERPAYING

Finding out if you're getting a good price on a used car isn't as difficult as you might think. There are many online sites like Edmunds that compare the price of the vehicle you are buying to others for sale in your area. By simply searching for the make and model you want, you'll find out whether you're paying above, below or at the vehicle's market value.

EXPAND YOUR SEARCH

You may find a better deal if you broaden your search beyond local dealerships. Instead of driving to local dealerships, look online first to see what the dealerships have in stock before you go there. You can adjust your search parameters to include nearby cities and counties that may have better deals.

EXPLORE OTHER TYPES OF VEHICLES

If there's a specific make, age, and mileage you typically target when buying a used vehicle, you may want to rethink your usual approach. With higher rates and interest rates, choosing a higher mileage or older model will help you reach your desired monthly payment. However, if you decide to do so, be sure to get a vehicle history report to make sure it has a clean title and has had regular maintenance visits. A pre-purchase inspection by a mechanic can also help identify potential problems.

If you prefer a nearly new vehicle, then consider a different type of vehicle or make to save money. Trucks and SUVs are popular and often command a higher price than sedans or subcompact SUVs. If you don't need a truck or a large SUV, you can save a lot of money by getting something smaller.

Getting the lowest possible interest rate will lower your monthly payments. Instead of taking the dealership's word for the best price, get pre-approved by a local bank, credit union or online lender before going to the dealership. Then compare all prices to make sure you're getting the lowest price. If you're not satisfied with the interest rate you received, you may be able to refinance the loan later if interest rates drop.

MAXIMIZE THE VALUE OF YOUR TRADE-IN

There is good news if you currently have a car with equity. Pre-owned prices are still high, but that means you'll get more for your car, which will help offset the higher purchase price of your next vehicle. Get a free vehicle appraisal through online sites like Edmunds before accepting a trade-in offer from your dealership to make sure you're getting a fair value. If you don't have a trade or if you don't have equity, consider putting more money down to get the monthly payment you want.

STORE CERTIFIED PREREQUISITE

Certified Pre-Owned (CPO) vehicles can be harder to find in today's market, but if you can find one within your budget, we recommend buying it. CPO vehicles not only undergo thorough inspections and additional repairs and offer extended warranties, but they could potentially qualify for interest rates similar to those for new cars. Although CPO vehicles are more expensive, the lower interest rate and longer warranty could offset the higher price over the course of ownership

SAYS EDMUNDS

Most used car buyers will have a harder time finding the deal they want in 2023 and 2024. But if you make a few compromises on the type of vehicle you want, research what your trade-in is worth, and compare interest rates and local prices, you can feel much better with your purchase.

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This story was provided to The Associated Press by the automotive website Edmunds.

Michael Cantu is a partner at Edmunds and is on Instagram.