Used car prices are s teadily dropping, mostly due to oversupply , and while electric and luxury vehicles are being hit the hardest, other segments don’t always see a big savings gap between new and used. For years, I’ve been fighting the myth that used cars will always save buyers money over a new car. Even though pre-owned models, for the most part, offer a better value proposition, often the most popular brands that get high marks for retaining their value can be some of the worst cars to buy in the pre-owned marke t.
This is especially true once you factor in the difference between the interest rates on used models versus new ones. Let’s take a look at one of the most popular crossovers the RAV4 Hybrid. A market scan of the DC Metro looking at 2022 models with under 30,000 shows cars in the low to mid-$30,000 range.
A brand new 2024 XLE Hybrid with the weather package has an MSRP of $35,510 including the destination fee. Given that most of the two-year-old cars with reasonable miles cluster around $32,000 - $33,000, that savings delta doesn’t make a lot of sense compared to getting a new one with a full warranty. Sometimes the savings look wide enough to justify the pre-owned car, but once the interest rates are factored in, the value proposition changes.
I was recently shopping for a used Subaru Ascent for some clients in the Seattle metro area. The customers wanted to be around $35,000 out the door and that meant something like this three-year-old model with abo.