Used-Car Prices Are Falling, Especially Among EVs

Prices have dropped over the past year, although high interest rates remain a challenge for buyers who finance

By Benjamin Preston

Updated by Jon Linkov

Updated December 3, 2024

Used car with price on windshield at dealer's lot.

Although the used-car market is less volatile than in the past few years, interest rates remain high. The average used car loan rate was just over 12 percent at the end of June 2024 according to Experian, a data analytics and consumer credit reporting company. This adds to the expense faced by buyers who have to finance, because they’ll end up paying more over the life of the loan.

According to Cox Automotive, an automotive services and technology provider, the average price of a used car in November was $25,499.

While the Federal Reserve Bank has begun to cut interest rates, you may not want to wait to time your purchase to coincide with future cuts. If you need to buy a used car now, our expert advice and market insights from industry insiders can help guide you to the ones that offer the best value.

In good times and bad, Consumer Reports members can search our Used Car Marketplace for vehicles for sale in their area, sorting by the factors that matter most. The listings include CR reliability and owner satisfaction ratings, and there’s a free Carfax report for most of the vehicles. Members can also access ratings and information on used vehicles going as far back as 20 years.

Our main advice for buyers in today’s market is to act quickly and negotiate from an informed perspective. That can make the difference between getting a fair deal and paying too much. Also, it has never been more important to make sure your credit is in good shape. Interest rates are up, but the most competitive rates are reserved for those with strong credit ratings.

Here are some other ways to make the best of the current used-car market.

Consider buying a new car. The average price of a new car is about $47,000—showing a decrease this past year and down from its peak in December 2022. According to a recent report from CarGurus, an online marketplace for new and used cars, lower prices, combined with slowing sales and building inventory, mean that dealers and manufacturers are more likely to offer incentives on new cars in the months ahead. That means further price breaks for consumers. Also, new car buyers with good credit can benefit from the manufacturer-subsidized financing offered on some brand-new models.

If you have to borrow money to buy a car, keep in mind that the older the car, the more interest a lender will charge. And with new cars, there’s also the added benefit of a fresh factory warranty. Check dealer incentives in your area and see what’s being offered. Pat Ryan, CEO of CoPilot, says that some of the best used-car deals right now can be found among Chryslers and Kias.

Look at older models. Used-car prices have dropped 10 percent on average over the last year, but pricing on older cars has seen a sharper decline. Ryan says that prices on 4- to 7-year-old used cars are down 19 percent, and 8- to 13-year-old cars are down 18 percent.

However, if you decide to buy an older car, Consumer Reports recommends looking at models known for reliability. Vehicles more than 5 or 6 years old aren’t likely to still be covered by a factory warranty (although many EVs have 10-year warranties). You can purchase an extended warranty or service plan, but it’s usually better to save what you’d spend on those for future repairs. The downside is that if you have to finance the purchase, interest rates tend to be higher on loans for older cars.

Shop used EVs. Ryan says automakers built more EVs than consumers ended up wanting over the past few years, which has caused used EV prices to drop 17 percent over the last year (and 36 percent over the past two). The best deals, though, may be found among used Teslas, which are selling for 36 percent less than they were a year ago. Ryan says used Model S prices have fallen 56 percent to an average of $32,582, and used Model 3 prices have come down 48 percent to an average of $26,785.

Prearrange financing. Figure out your budget and get financing based on what you can afford to pay monthly and as a down payment. It’s always a good idea to get financing through your bank or credit union before going to a dealership to look at cars. That way you have a baseline against which you can compare the terms of dealer financing, which may or may not be as good a deal.

As always, getting financing secured for a private-party sale is a little more difficult. You’ll need to have the funds secured and ready to pay out so that you can buy a car quickly if you find one that is reliable, fuel-efficient, and meets your other needs.

Cast a wide net. Prices outside your area may be better. You can find a good variety of used models on websites like TrueCar.com, operated by a CR partner, and through Consumer Reports’ Used Car Marketplace. Expand your geographic search if you need to. Be cautious about searching too far from home. You want to be able to go see any car you’re considering buying and test-drive it before signing a sales or leasing contract. This is especially true for used cars. The market hasn’t completely settled down yet, so if the car you’re looking at seems like a good deal, someone else might scoop it up from underneath you if you have to travel too far to get to it.

Do your research. Whether buying new or used, consult Consumer Reports’ road tests and ratings, looking closely at reliability, owner satisfaction, and safety. Make a short list of contenders to test-drive, and have a good understanding of the various trim versions and features. Print out information on the models you’re interested in from CR.org and manufacturer websites to take along with you.

Buy something reliable. If you can’t find a newer used car within your price range (including financing), you may find yourself looking at older models that you wouldn’t otherwise have considered. CR recommends taking any used car to a reputable mechanic to have it inspected. (If the owner or dealer balks at this request, you may be better off looking elsewhere.) You can also consult CR’s predicted reliability scores to make sure you buy something that won’t give you problems later.

Be willing to compromise. If you have to buy an older car, some of the features you want—whether advanced safety and driver assistance features or connectivity—might not be available. Decide which are absolute must-haves, and be flexible on the rest. As always, you’re more likely to find deals among less sought-after models like small sedans and front-wheel-drive SUVs, while larger SUVs and pickups are likely to be more expensive and quicker to sell.

Don’t borrow too much. Put as much money into a down payment as you can afford. This is good advice in any economic climate. Maximizing your down payment will reduce the amount you have to pay in interest on the rest and minimize the chance that you’ll be left hanging as your aging car’s value sinks over the years, particularly with used-car prices still relatively high.

For example, if you have to borrow $15,000 for a used SUV that will be worth less than $10,000 in a year or two, you may end up “underwater,” or owing more than the car is worth, especially with the average interest rate on a used-car loan at nearly 12 percent. If you crash the car or if it’s stolen, you’ll still have to make payments. Cars are depreciating assets in the best of times, but they’re likely to depreciate much more quickly if prices fall further.

Benjamin Preston

Benjamin Preston has been a reporter with the Consumer Reports autos team since 2020, focusing on new and used car buying, auto insurance, car maintenance and repair, and electric bikes. He has covered cars since 2012 for the New York Times, Time, the BBC, the Guardian, Road & Track, Car and Driver, Jalopnik, and others. Outside CR, he maintains his own small fleet of old cars and serves as a volunteer firefighter, specializing in car crash response and vehicle extrication.