The used-car market is cooling off after three brutal years, and the numbers are finally moving in buyers' favor.
According to Cox Automotive's Manheim Used Vehicle Value Index, wholesale prices have slipped year over year for months, and that decline is now trickling down to dealership lots.
But here's the catch: the relief isn't landing evenly.
Newer, low-mileage SUVs and trucks are still commanding serious money, while older sedans and high-mileage commuters are sitting on lots longer, forcing sellers to cut prices just to move inventory.
During the pandemic chip shortage, automakers built and sold far fewer new cars, which means the typical three-to-five-year-old trade-in that usually floods dealerships is in short supply.
That scarcity keeps prices elevated on the most desirable used vehicles.
At the same time, shoppers are getting squeezed from another direction.
Auto loan rates remain stubbornly high, with the average new-car loan near 7% and used-car loans often climbing past 11% for buyers with weaker credit.
A lower sticker price doesn't help much when the monthly payment stays painful.
Repossessions are adding pressure in the opposite direction.
As more borrowers fall behind on payments, banks are pushing repossessed vehicles back into the market, particularly older models.
That's one reason you'll see better deals on six-to-ten-year-old cars than on nearly-new ones.
If you're shopping, focus on vehicles that have been sitting on the lot for 60 days or more.
Dealers pay floor-plan interest on every day a car doesn't sell, and that gives you real negotiating leverage on aged inventory.
Get preapproved for financing before you walk in.
Dealerships make money on the loan markup, so an outside preapproval from a credit union or your bank gives you a baseline to compare against and a way to walk away from a bad rate.
Falling prices and rising repossessions mean more rough-condition cars are circulating, and a $150 pre-purchase inspection can save you thousands in hidden repairs down the road.
Trade-in values deserve a fresh look too.
If you bought a car in 2021 or 2022, your equity may still be positive, but it's shrinking fast.
Waiting another year to sell could mean giving back money you'd rather keep.
The bottom line: the market is normalizing, not crashing.
The days of paying thousands over sticker are fading, but the days of rock-bottom used-car bargains aren't fully back either.
Our take: if you need a car now, buy a slightly older one and negotiate hard on aged inventory.
Final Thoughts
If you can wait, waiting six months could put real money back in your pocket as supply keeps catching up.