The average price of a used car is up by about $6,000, thanks to supply-chain issues, but prices may drop again by about 30%.
After months of price hikes, used cars may finally get less expensive. A report released recently by accounting and consulting firm KPMG suggests prices may slide by as much as 30% by this time next year.
In just five months, the average asking price for a used car climbed from about $21,000 to over $27,000, according to Cox Automotive.Still, KPMG notes continued interruptions caused by COVID-19 variants could disrupt the supply chain and make it difficult for automakers to source critical parts for new vehicles.The financial impact of declining used car values Consumers who have taken out loans to buy used cars over the past few months may be in for a shock if values tumble.
Car-loan debt is at an all-time high in the U.S. — $1.44 trillion. While the average loan on a car is considerably less than that on a home during the 2008 financial crisis, such a rapid slide in values could immediately make many car owners upside down on their loans.How did we get here? Several factors resulted in rapidly escalating used car prices earlier in 2021, beginning with increased demand for new cars early this year.