This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Why January Is a Great Time to Buy a Used Car

BOSTON ( TheStreet) -- U.S. auto dealers just recorded their best December new-car sales in six years -- making January a great time to buy used vehicles as firms scramble to unload all of the trade-ins they just took in.

"If you traded in a vehicle in December, it's more likely than not still available [for resale] in January," says Richard Arca of car-buying site

Arca says a confluence of factors should favor used-car buyers in this period:

  • Dealers sold 1.36 million new cars and light trucks in December as an improving economy and end-of-year "sale-a-thon" promotions boosted demand. That's the best December showing since 2007, before consumers felt the Great Recession.
  • Strong December sales mean dealers have plenty of used vehicles on their lots, given that about half of new-car purchases involve trade-ins and used cars take around 45 days on average to resell.
  • Plenty of consumers took out three-year leases during the downturn instead of buying, so cars leased in late 2010 and early 2011 are just returning to dealerships now for resale.
  • Used cars typically lose a good chunk of their value when the clock strikes midnight New Year's Eve and models suddenly become one year older in many buyers' minds. For instance, Edmunds says the typical 2009 model sold for $19,392 in December 2012 but $18,738 in January 2013 -- a 3.4% drop in just one month.
  • An improving economy means more and more consumers want new vehicles instead of used ones, reducing used-car demand.
  • That's all good news for used-vehicle buyers, who've faced higher prices and a smaller-than-normal inventory of vehicles to choose from in recent years.

The tough economy meant fewer Americans could afford new cars, boosting demand for used vehicles even as the supply of trade-ins available for resale dropped.

Must Read: How to Handle Your Big Inheritance Elegantly

Arca says used-car shoppers still face something of a sellers' market, but that supply and demand moved in buyers' direction during 2013 and should continue to do so this year.

"There's still a slight used-car shortage, but we're nowhere near where we were in 2012 -- and 2014 will be even better for used-car shoppers than 2013 was," he says.

That said, the expert recommends would-be buyers act fast; used-car prices typically start rising around mid-February. Arca says demand historically rises as the weather improves and consumers get income-tax refunds that many use for vehicle purchases.

He also advises shoppers to at least check out some new-car deals before settling on used models, as many automakers have great financing offers right now. "Every manufacturer has at least one deal on a compact or midsized vehicle for $199 or $249 a month, and that's very affordable," Arca says.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $95.18 1.64%
FB $117.43 -0.96%
GOOG $692.36 -0.84%
TSLA $232.32 -3.92%
YHOO $36.01 -1.42%


Chart of I:DJI
DOW 17,750.91 -140.25 -0.78%
S&P 500 2,063.37 -18.06 -0.87%
NASDAQ 4,763.2240 -54.37 -1.13%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs