Used Car Prices have Finally Peaked in Canada: Will they Drop?

Used Car Prices have Finally Peaked in Canada: Will they Drop?

Posted on September 26, 2022

While new car prices are still climbing in Canada, thanks in part to runaway inflation, the used car market has started to stabilize, which is great news for Canadians that need a newer vehicle but don't have the desire to take on a new car loan.

Not all used makes and models are created equal

When buying a new car, establishing the value of the vehicle is pretty straightforward. The manufacturer provides an MSRP (manufacturer's suggested retail price).

You take that price plus any add-ons you want, and that is your final price.

With used cars, it is not always so cut and dry. The price of a used car is whatever the market is willing to pay for it.

There are certain brands that hold their value more than others; an example of a brand that retains its value is Jeep.

While Jeep Cherokee and Grand Cherokee are fantastic for driving in the city and occasional offroad use, the Wrangler is by far the most iconic model of Jeep out there, everyone has envisioned owning a Wrangler with the roof and doors detached and enjoying a drive-by the beach.

Even if you are driving an older Wrangler, rest assured there will be buyers that will pay a premium just to have that vehicle.

Why is the used car market in Canada stabilizing

At the height of the pandemic, governments throughout the world were pumping money into the economy to keep things moving.

This cheap money was not only available in Canada; consumers from all over the world had access to cheap credit and were buying assets.

Since the number of new cars being manufactured was hindered by bottlenecks in the supply chain, consumers flush with cash were buying up real estate and used cars.

Now that the Bank of Canada and other central banks are tightening up the money supply, consumers are not buying used cars in droves; fewer buyers mean less demand which reduces the amount of upward pressure on used car prices.

Now is the time to lock in a good deal

While everyone is feeling anxious about variable mortgage rates climbing in Canada, this is your opportunity to lock in some savings by getting a used car loan approved before interest rates go any higher.

Even if your credit score isn't too high, you can qualify for a competitive used car loan, but timing, like all things, is key.

You need to head over to a local used car dealership in your area and start test driving their fleet of used cars.

This is the only way you will be able to find a car that is going to meet your driving needs and budget.

The dealership will be able to get you approved for a loan and behind the wheel of a car today, but you need to contact the dealership soon before the Bank of Canada moves interest rates even higher.

If you need a car loan right away Click here to get pre-approved, we'd love to help!