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Did you know that between 2019 and 2020, the number of US citizens working from home grew from 22 percent to 42 percent? For many, that change is permanent, with offices offering full-time remote opportunities or more flexibility in office work schedules. If you and your partner are both working from home, you may have noticed that having two vehicles is starting to feel unnecessary. That’s why now may be a great time to sell your second car.
The current used car market
According to Market Watch, the average cost of a used car has increased by 10% over the last 12 months. This rise in price doesn’t look like it will be hitting the brakes anytime soon; demand for used cars has doubled since March 2021. Eric Ibara, director of residual values at Kelley Blue Book, said, “If you have an extra car to sell…there may never be another time greater than this.” Let’s talk about why right now may be the best time to sell your used car.
Why is this happening?
When the pandemic hit, so many industries were affected, and car manufacturers were no exception. Many manufacturers and dealerships had to shut down for safety reasons. This meant fewer new cars were hitting the market. Just when production got back underway, a recent shortage caused even more disruption.
The chip shortage
A combination of factors, including a fire at a major manufacturing plant in Japan and a drought in Taiwan, is affecting the global production of semiconductors. Semiconductors are required to create microchips that are used in nearly all modern vehicles. From Ford to Volkswagen, almost all major manufacturers have been affected. This means there are far fewer new cars currently on the market — bad news for buyers, but good news if you’re looking to sell a used vehicle.
As if a global pandemic and semiconductor shortage weren’t enough, there are even more reasons why the used car market is booming.
In 2020, not a lot of us were traveling, which meant rental car services felt the pinch. Many of them chose to sell off some of their fleets as a way to stay afloat. Now that folks are starting to travel again, there is a severe rental car shortage. Such services like Enterprise, Hertz, and Avis are looking to buy cars in bulk.
Fewer used cars are available
It stands to reason that if the semiconductor shortage is slowing the production of new vehicles, then those in the market for a car are purchasing used cars. If you need a car, chances are you’re not able to wait until new vehicle production is back to full capacity. Because so many people are in the market for a car right now, this means used cars are being sold quickly and at higher costs.
New vehicles are more expensive than normal
Fewer products with more demand than usual due to folks having a little extra money in their pockets from stimulus checks means those prices rise. It’s simple supply and demand; however, for many, the price increase for new cars is out of their budget. Even if a used car costs more than it would have this time last year, it still beats paying so much more than usual for a new vehicle.
Which used cars are worth the most?
While all used vehicles have more value right now, some are more in demand than others. Purchasing a car is no small expense, and people are still hunting for their dream car. Here are the used cars that are currently the hottest on the market according to iSeeCars.com’s latest analysis:
|Used Vehicle||Average Used Car Price (April 2021)||$ Price Change from April 2020||YoY % Price Change|
|4||GMC Sierra 1500||$42,347||$9,418||28.6%|
|6||Chevrolet Silverado 1500||$37,324||$7,960||27.1%|
|10||Land Rover Range Rover Sport||$59,579||$11,969||25.1%|
Considerations to take when selling your second car
Just because now is a great time to sell a used car doesn’t mean you should jump at the opportunity without considering your own travel needs. You and your partner should discuss the following considerations before you decide if selling is right for you.
Do you need two cars?
If you have a car collecting dust in your driveway since March of 2020, it may be time to consider selling. You may think, “What’s the harm in keeping it?” especially if it’s paid off, but you may not be considering the insurance, state inspection, and registration costs. Cars cost money, even when you’re not actively using them.
Will you be back in the office soon?
Some offices have decided to go remote full time, while others can’t wait for the green light to be back in person. Talk to your manager before deciding what to do with that second car. If both you and your partner are working from home right now, one car may feel like more than enough. However, if your morning commute is destined to return to normal, you may want to think twice. Even if you return to work and your partner continues to work from home, chances are they don’t want to be stuck in the house all day with no form of transportation.
Check the terms of your lease or financing
You can sell your leased car; you need to ensure that the buyout price won’t exceed what you sell the vehicle for. If you want to get out of a lease, now is a great time. Just be sure that you don’t end up selling the car and still owing on the lease. You can ask your leaseholder for the current buyout price and use an online pricing guide to ensure that you’ll make enough on the sale to meet the buyout price. If you’re unsure if your vehicle is fully paid off and yours to sell, contact the seller to double-check before putting your car on the market.
How to sell your used car
Now that you’ve established that selling your second vehicle is the right choice for you and your family, it’s time to figure out just how to do that. The process can feel daunting if you’ve never sold a car before, but our step-by-step guide makes it easy. Read on to learn more.
Calculate your car’s worth
You need to arm yourself with accurate information before you put your car on the market. Kelly Blue Book is an excellent resource for finding out exactly how much your vehicle is worth. You can get your trade-in and private party price by answering a few simple questions about your car. It’s also important to check websites where used vehicles are being sold in your area and see how much a car like yours is going for.
Make sure your car is clean and doesn’t require maintenance
You wouldn’t buy a house that didn’t seem clean, and if you did, you wouldn’t buy it at market value. Presentation is crucial; make sure your car is clear of personal items and is clean. The other thing to consider is if your vehicle requires maintenance. You can sell a car that has some issues, but it will knock down the price. Weigh the cost of paying to fix it yourself versus having potential customers offer under the asking price to incur the charges themselves. Always be upfront about past accidents, mileage, and any issues with the vehicle when selling.
Trading it in vs. selling it yourself
You have to decide if you want to sell your car to a dealership or attempt to sell it to a private party on your own. There are pros and cons to each option.
Pros of selling to a dealership
- You won’t have to meet multiple customers in different locations to get the best price
- You can receive a cash offer
- Not much paperwork on your end to transfer ownership
Cons of selling to a dealership
- Dealerships need to turn a profit; therefore, you won’t make as much as you would selling to a private party
- You’ll need to take care of any mechanical issues yourself before selling
While selling to a dealership may be the less time-consuming option of the two, you may want to decide if the stress of selling the vehicle on your own is worth the extra money. You may also find dealerships are not interested in older vehicles depending on their customer base.
Whatever you decide, Elephant has you covered
No matter how many cars you have in your driveway, you can trust Elephant Insurance to provide safe coverage. Check to see if we provide coverage in your area, and get a quote today.
Article last updated on May 31st, 2023 at 5:07 pm