Affordable used cars priced under $20,000 have become extremely rare. According to an iSeeCars study, only 1 in 9 (11.4%) three-year-old used vehicles now cost less than $20,000, a dramatic drop from 49.4% in 2019.
Depreciation used to provide a major discount for used car buyers. For example, in 2019, buying a three-year-old Toyota Camry saved buyers about $8,000 compared to a new one. Today, the savings on the same model have been cut roughly in half.
The Shift to Older Cars: To find a majority of vehicles priced under $20,000 today, shoppers now have to look at 7-year-old cars instead of 4-year-old ones. But buying older cars to stay within a budget brings new hurdles:
Factory warranties (like Hyundai's 10-year/100,000-mile powertrain coverage) often do not fully transfer to secondhand buyers.
Mainstream lenders often cap financing on cars near the 10-year mark, and used car interest rates are significantly higher than new car rates.
Modern 7-year-old cars are packed with complex tech (like sensors, cameras, and radar-embedded bumpers) making routine repairs and replacements significantly more expensive.
The drop in affordable used cars is driven by a lack of late-model supply, a previous drop-off in auto leasing, and skyrocketing new vehicle prices (with the average new car transaction price hitting nearly $50,000).
Thanks for reading everybody!
-Paul