Used car prices are finally starting to drop after years of record highs, offering relief to buyers—especially in the SUV segment. Increased inventory, slower demand, and more new car availability are helping stabilize the market, making now a better time to shop for a pre-owned vehicle.
Key Takeaways
- Used car prices are declining: After peaking in 2022, prices have steadily decreased due to improved supply and reduced demand.
- SUVs are leading the price drop: Compact and midsize SUVs, once in high demand, are now more affordable as inventory rebounds.
- New car availability is improving: More new vehicles on lots mean fewer buyers turning to used cars, easing pricing pressure.
- Interest rates still impact affordability: Even with lower prices, high loan rates can affect monthly payments.
- Best time to buy is late summer to fall: Dealers often discount older models to clear space for new inventory.
- Certified pre-owned (CPO) offers value: CPO SUVs provide warranty protection and peace of mind at a lower cost than new.
- Shop around and negotiate: With more options available, buyers have stronger bargaining power than in recent years.
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Are Used Car Prices Dropping? What You Need to Know
If you’ve been eyeing a used SUV but held off due to sky-high prices, now might be the time to act. After more than two years of unprecedented price hikes, the used car market is finally cooling down. Prices are dropping—especially for popular models like compact and midsize SUVs. This shift is welcome news for buyers who’ve been priced out of the market or forced to settle for older, less reliable vehicles.
The surge in used car prices began during the pandemic, when supply chain disruptions limited new car production. With fewer new vehicles available, demand shifted heavily to the used market. Dealers raised prices, and even high-mileage cars sold for more than their original MSRP. But now, the tide is turning. Increased production of new vehicles, a slowdown in consumer spending, and higher interest rates are all contributing to a more balanced—and buyer-friendly—market.
Why Are Used Car Prices Falling?
Visual guide about Are Used Car Prices Dropping
Image source: autobroadcast.com
Several key factors are driving the decline in used car prices. Understanding these can help you time your purchase and get the best deal.
Improved New Car Inventory
One of the biggest reasons used car prices are dropping is the return of new car inventory. Automakers have resolved many of the semiconductor chip shortages that plagued production in 2021 and 2022. As a result, dealerships are seeing more new SUVs, sedans, and trucks on their lots. When new cars are readily available, fewer buyers turn to the used market, reducing demand and putting downward pressure on prices.
For example, brands like Toyota, Honda, and Ford now have months’ worth of new SUV inventory—something unheard of just a year ago. This abundance gives consumers more choices and reduces the urgency to buy used.
Slower Consumer Demand
High inflation and rising interest rates have made big-ticket purchases like cars less appealing. Many buyers are delaying upgrades or opting for cheaper alternatives. This drop in demand means dealers can’t command the same premiums they once did. In fact, some dealerships are offering incentives on used vehicles, including cash rebates and low APR financing, just to move inventory.
Additionally, the used car market is experiencing a wave of off-lease vehicles returning to dealers. As leases signed during the pandemic end, more late-model SUVs are hitting the used market, increasing supply and lowering prices.
Higher Interest Rates Impact Affordability
While used car prices are dropping, financing costs remain high. The average interest rate for a used car loan is now over 10%, compared to around 5% in 2021. This means even if the sticker price is lower, monthly payments can still be steep. Buyers need to factor in both the purchase price and financing when evaluating affordability.
For instance, a $25,000 used SUV with a 10% interest rate over 60 months could cost nearly $500 per month. That’s a significant expense, especially for families on a tight budget. As a result, some buyers are choosing older, lower-priced models or extending loan terms—though that increases total interest paid.
SUVs: The Segment Seeing the Biggest Price Drops
Among all vehicle types, SUVs—especially compact and midsize models—are experiencing the most noticeable price declines. These vehicles were in extremely high demand during the pandemic, driving prices to record levels. Now, with more options available, buyers have the upper hand.
Compact SUVs Lead the Way
Models like the Honda CR-V, Toyota RAV4, and Mazda CX-5 are seeing some of the steepest price drops. According to industry reports, the average price of a used compact SUV has fallen by 10–15% over the past year. A 2021 RAV4 that sold for $32,000 in early 2023 might now go for $27,000–$28,000, depending on mileage and condition.
This is great news for buyers who want a reliable, fuel-efficient SUV without breaking the bank. Many of these vehicles come with modern safety features, Apple CarPlay, and all-wheel drive—making them practical for families and commuters alike.
Midsize and Full-Size SUVs Are Also More Affordable
Larger SUVs like the Ford Explorer, Toyota Highlander, and Chevrolet Traverse are also seeing price reductions. While they don’t drop as quickly as compact models, the trend is still downward. Dealers are eager to move these higher-priced vehicles, especially as fuel prices remain volatile and consumers look for more efficient options.
One practical tip: Look for SUVs that were popular rental fleet vehicles. Companies like Hertz and Enterprise are selling off large numbers of late-model SUVs, often with low mileage and full service records. These can be excellent buys if inspected properly.
When Is the Best Time to Buy a Used SUV?
Timing your purchase can save you hundreds—or even thousands—of dollars. While prices are already dropping, certain times of year offer even better deals.
Late Summer to Early Fall
The best window to buy a used SUV is typically from August through October. Dealers are preparing for the new model year and want to clear out older inventory. You’ll often find deeper discounts, special financing offers, and more negotiating room during this period.
For example, a dealer might knock $2,000 off a 2022 SUV in September to make room for the 2024 models arriving in showrooms. That’s real savings you can pocket or use toward a better trim level.
Avoid Year-End Rush
While holiday sales events sound appealing, December can actually be a more expensive time to buy. Many buyers are rushing to use tax refunds or take advantage of year-end bonuses, increasing demand. Prices may not drop as much, and inventory could be thinner.
Instead, consider shopping in January or February. Post-holiday lulls mean dealers are less busy and more willing to deal. Plus, you’ll avoid the crowds and have more time to inspect vehicles and compare offers.
Tips for Buying a Used SUV in a Changing Market
Even with falling prices, buying a used SUV requires careful planning. Here are some practical tips to help you get the best value.
Get Pre-Approved for Financing
Before you start shopping, get pre-approved for a loan from your bank or credit union. This gives you a clear budget and strengthens your negotiating position. Dealers may try to push higher-rate financing, but with pre-approval, you can compare offers and choose the best deal.
For example, if your bank offers 7% APR and the dealer offers 10%, you could save over $2,000 in interest on a $25,000 loan over five years.
Check Vehicle History and Get an Inspection
Always request a vehicle history report from services like Carfax or AutoCheck. Look for accidents, title issues, and service records. Even if a SUV looks clean, have it inspected by a trusted mechanic. A $100 inspection can uncover hidden problems that could cost thousands to repair.
Pay special attention to SUVs with high mileage or those that were used for rideshare or delivery services. These vehicles may have been driven hard and require more maintenance.
Consider Certified Pre-Owned (CPO)
Certified pre-owned SUVs offer the best of both worlds: lower prices than new models and added peace of mind. CPO programs typically include extended warranties, roadside assistance, and rigorous inspections. While they cost more than non-certified used cars, the protection can be worth it—especially for families or long-distance drivers.
For instance, a CPO 2021 Toyota RAV4 might cost $2,000 more than a similar non-certified model, but it could come with a 7-year/100,000-mile powertrain warranty. That’s valuable coverage if something goes wrong.
What’s Next for the Used Car Market?
Experts predict that used car prices will continue to decline modestly through 2024, though not as sharply as in previous years. The market is stabilizing, but it’s unlikely we’ll return to pre-pandemic price levels anytime soon. Factors like inflation, interest rates, and consumer confidence will continue to influence pricing.
One trend to watch is the growing availability of used electric and hybrid SUVs. As more EVs enter the market, their used counterparts are becoming more common—and more affordable. Models like the Tesla Model Y, Ford Mustang Mach-E, and Hyundai Kona Electric are starting to appear in used lots, often with significant depreciation.
While range anxiety and battery concerns remain, these vehicles offer low operating costs and federal tax credits in some cases. For eco-conscious buyers, now could be a great time to explore used electric SUVs.
Conclusion
Yes, used car prices are dropping—and SUV buyers are among the biggest beneficiaries. After years of inflated costs, the market is finally shifting in favor of consumers. Increased inventory, slower demand, and more new car availability are driving prices down, especially for popular compact and midsize SUVs.
While high interest rates still pose a challenge, smart shoppers can find excellent deals by timing their purchase, getting pre-approved, and considering certified pre-owned options. Whether you’re looking for a fuel-efficient crossover or a rugged family hauler, now is a better time than it’s been in years to buy a used SUV.
So if you’ve been waiting on the sidelines, don’t wait too long. The window of opportunity is open—but it won’t stay that way forever. Start researching, test drive a few models, and negotiate confidently. Your next SUV could be closer than you think.
Frequently Asked Questions
Are used car prices dropping in 2024?
Yes, used car prices are dropping in 2024 after peaking in 2022. Improved new car inventory and slower demand are helping bring prices down, especially for SUVs.
Why are used SUV prices falling?
Used SUV prices are falling due to increased supply of new vehicles, more off-lease returns, and reduced consumer demand caused by high interest rates and inflation.
Is now a good time to buy a used SUV?
Yes, now is a good time to buy a used SUV. Prices are declining, inventory is up, and buyers have more negotiating power than in recent years.
How much have used car prices dropped?
On average, used car prices have dropped 8–12% since 2022, with compact SUVs seeing some of the steepest declines—up to 15% in some cases.
Should I buy a certified pre-owned SUV?
Certified pre-owned SUVs are a great option if you want warranty protection and peace of mind. They cost more than non-certified models but offer added reliability.
Will used car prices keep dropping?
Prices are expected to decline modestly through 2024, but not as sharply as before. The market is stabilizing, so major drops are unlikely in the near term.