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Used Car Prices in October 2022: Will Prices Finally Drop?

Used Car Prices in October 2022: Will Prices Finally Drop?

 

The used car market is an excellent barometer of the overall health of the Canadian economy. We've got some news on used car prices in October 2022.

 

When times are “good,” consumers feel confident in their finances and opt to buy a new car instead of purchasing used vehicles.

 

Usually, when a consumer buys a new car, they trade-in or sells their existing vehicle, which becomes additional inventory in the used car marketplace.

 

This increase in inventory means there is more supply than demand, and prices should come down.

 

While used car prices have come down, it is not due to an uptick in the number of new cars being sold; on the contrary, it is due to a lack of financing being available to consumers.

 

Inflation and the Impact It’s Having on the Canadian Economy

 

Inflation is tracking over 7% monthly in Canada; this means that everything has gotten 7% more expensive than it was a month ago.

 

Canada Inflation over the years https://www.reuters.com/world/americas/canada-annual-inflation-rate-rises-57-feb-highest-since-aug-1991-2022-03-16/

Canada Inflation over the years

 

The Bank of Canada has ratcheted up interest rates to slow inflation, but this will also send the Canadian economy into a recession.

 

When interest rates go up, lenders who offer car loans have to pay more to access capital to lend.

 

These added costs are passed on to you, the consumer; before the interest rate increase, you could have qualified for a new car loan, but now, you may not even qualify for a used car loan, depending on your situation.

 

As the amount of cheap money leaves the market, car-buyers are not able to pay the prices being quoted.

 

Used car sellers are forced with the option of keeping the vehicle and waiting till things improve or lowering their asking price to sell the car.

 

Since most sellers need to move the vehicle to make room for new inventory, they are lowering the prices on used cars, but it will take some time before the market finds equilibrium.

 

How to Make Sense of the Canadian Used Car Prices in October 2022

 

Interest rates will need to increase substantially before inflation slows down to a manageable level.

 

Before that happens, we can expect the interest rate on used car loans to increase by a few more percentage points.

 

Canada Interest Rates

 

If you anticipate needing a new car within the next 12-24 months, then you should consider buying a used car ASAP.

 

By moving quickly, you should be able to lock in a decent interest rate and get a more affordable and reliable vehicle than the one you are currently driving.

 

Where to Secure the Most Competitive Used Car Deals

 

We’d be doing you a disservice if we didn’t provide you with the information you need to secure the best used car deals.

 

The answer to where to get the best deals is just down the road from you, at your local car dealership.

 

Your local dealership will make sure you get a great deal, and since they are local, you can test drive their used cars today.

 

We will use all our skill and experience to deliver the lowest possible auto loan rates, guaranteed. Contact Car Nation Canada Direct to learn how we can help.

Categories: Auto Loan

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