We have officially reached the season of chills and thrills. No longer are the days of brutal breezes (or lack thereof) and rays of skin-pinkening sunshine. The sky is turning heavy, the trees yellow, and the windshields frosted on brisk mornings. But what does the season change mean for the used car market? Is there any positive used car news in October, or is the market just as spooky as the upcoming festivities?
In our most recent used car news, we spoke of the ongoing rollercoaster that is the used market. Not only were prices at a standstill, but the value of some used models was skyrocketing over their new counterparts.
No, really. Check it out.
Have no fear, though. Not only will I avoid too many Halloween-based puns in this month’s edition, but I will also be stating some good news (and, of course, some bad).
Gas Prices Are Down 10 Cents
Do you remember back in the spring and summer when gasoline prices were almost at kidney-selling highs? Back when bicycles and other eco-friendly forms of transportation were the new fad, causing gas pumps to remain empty and depressing?
Luckily, we have seen a steady decrease in gas prices since the nation’s record-breaking high average of $5 per gallon at the beginning of June. At the time, it seemed as if the future was bleak, and the average rate of gas was far, far from breaking downward.
As of October 24th, the average national gasoline price per gallon was $3.79, 10 cents lower than Monday of the week prior.
Unfortunately, this does not mean that prices have started a sled-worthy descent into all-time lows. In fact, the current average is still one cent higher than it was last month ($3.78) and still way off the average this time last year at $3.38. While positivity remains, it could always be better. Luckily, we may be reaching the point.
AAA spokesperson, Andrew Gross, stated “Global recession fears coupled with the Biden Administration’s plan to continue tapping the Strategic Petroleum Reserve into December has helped temper oil prices. This will help take the pressure off pump prices, benefitting drivers and their wallets.”
If you were planning on traveling for has (I kid), then the cheapest average is in Georgia and Texas, where the average is $3.20 per gallon.
Salvaged Cars From Florida Hurricane Being Sold in Tulsa
Here is some interesting used car news for your October. Though it may not directly affect you (as a Denverite), it’s always interesting to see what new crimes pesky delinquents are pulling.
After Hurricane Ian hammered the coast of Florida at the end of September, plenty of vehicles were left flooded and trashed in southwest cities. Some advantageous con artists saw this as an ample opportunity.
The Better Business Bureau warned denizens of Tulsa, Oklahoma that flooded cars have been sold throughout the area, most likely coming from the storm-torn Florida cities. And through reasonable deduction, it’s possible they are getting moved elsewhere throughout the country.
These vehicles, undescribed to potential buyers, have water damage ranging from cosmetic to mechanical. Some may be from areas of Florida that weren’t impacted severely by the hurricane’s force. Regardless, they are being lied about.
Amie Mitchell, president and CEO of BBB Tulsa, stated “Where you’re gonna have the problem are individuals trying to resell their cars or maybe they pushed it off onto someone else and they’re reselling it at that point.”
Though the issue has been noted in Tulsa first, it’s important to keep an eye out in the Denver area. Always inspect a used vehicle before you buy it, regardless of what natural disasters struck nearby.
Used Car Prices Plateauing, Again
It wouldn’t be October used car news without some unfortunate price information!
I wish I could report fascinating news about the future of car buying, but alas, things are mostly the same.
September saw a stabilization of prices. By the end of the month, the average used car sold for $28,237, just .06% higher than August. And, as trends go, things remain around the same. Projections show that October should have around the same rates, though we won’t know for sure yet.
Because we seemingly keep repeating the same information every month, we will refer back to our used car news in September:
It’s still important to note the shock caused by both inflation and the former pandemic that rocked the nation (and not in a good, rock’n’roll way). Basically, remember to consider the numbers regarding the initial comparison. Prices dropping 11% may sound dandy, but that ignores both retrospect and beginning numbers. An 11% drop from the record-breaking 40% price hike in January is still 29% higher than ever before. Many may refer to the plateau as normal, but remember that it is a new norm. We may never return to the numbers present before COVID-19.
No news is good news, though. Right?
The Auto Loan Situation Is Spooky for Lenders
A constantly fluctuating and albeit confusing car market has left banks scratching their heads. With loan takes backing out on high car loans, banks are backing out on giving loans. The pulling tension may make auto loans a dangerous step for automobile buyers.
The pandemic did more than shake up the lives of every human, it also shook up the car market. As we’ve noted (countless times), the prices for automobiles, both new and used, have seen record-setting increases since 2020. With the relegation of normal life, prices have also shifted downward from the norm set by the pandemic world.
Not only is it confusing for buyers, but it’s confusing for lenders. Here’s some new car news for October.
With used car prices going back down, banks have found their loss rates increasing drastically. To put it simply: buyers that took out strong holding loans during COVID are seeing the car market return to normal. Therefore, they are better off letting the loan go unpaid and getting their car repossessed. Believe it or not, plenty are pulling this move, opting for a cheaper used car than their previous pandemic-market loan.
As expected, banks are striking back, lowering their originations and strengthening underwriting standards. Now it’s harder to get a loan, and rates may be even worse than before to help cover potential losses.
“There has been a real tightening in margins on new-auto production, on one hand, and on the other there’s been a decline in used-car prices,” Fifth Third Chief Executive Officer Tim Spence said. “That has caused us to throttle a bit back on production [of loans].”
Jargon out of the way, it may not be the best time to get an auto loan. While some new cars are actually cheaper than their used versions, getting the loan may be nearly impossible. Ultimately, it may be better to wait the market out a little longer (if possible). If you need a new vehicle, used may still be the way to go.