Remember when small, fuel-efficient cars were cheap? Remember when we all wanted SUVs and nobody drove a small economy car? It wasn't that long ago. Times have certainly changed, haven't they?
What's happening now: Everyone wants to cut their gasoline bills and is turning in their big fuel-chugging pickup or SUV for a light-sipping Prius, Corolla or Civic. Makes sense to me. But what has now happened - what have the supply and demand of economics brought to us? Higher prices for small used cars! That's right - the price of used small cars has actually gone up! When's the last time a used car appreciated in value? Maybe never.
The Wall Street Journal reports that some used cars' prices are even approaching the levels of new models. If you want to buy a used 2006 Honda Civic, you can expect to pay $16,118 - or 86% of what a new 2008 model will run you. The average price of a 2006 BMW Mini Cooper runs 81% of what a new model costs. And the Toyota Prius? The ultimate gas-economy car? Forget it. A 2006 model runs 87% of what a new one costs! In the world we used to live in, the one with $1.50-$2.00 gas, two-year-old cars were worth about half of what a new car of the same model was worth. But now - for small cars - that trend has been turned on its head.
One of the problems is that Americans have been buying so many big, bigger and biggest cars during the last decade that our car makers stopped making very many fuel-efficient, small cars. So now, when we all want a Civic or a Camry, we can't get one because they don't make enough of the things. All the Ford Explorers and F-150s are sitting on the dealer lots now and not attracting much interest. The small cars, the Corollas and the Priuses, are blowing out the door - they can't keep the things on the lot. The strong demand has built up small cars' prices and now what do we have? Increasing demand and dwindling supply.
What this means: You have to work harder now, more than ever, to find a great car deal. And the best and by far the smartest place to get your car cheapest is at a Repo or Government Auction. It's not even close. Why pay $15,000 for your Civic or Prius when you can snare one at auction for $5,000? It takes a little extra work, sure, but we're talking about five-figure savings here.
The five-step car buying plan for the era of $4 gas:
1. Read my original post above and learn about the Web's most trustworthy, honest and worthwhile auction sites.
2. Select a site and sign up.
3. Form a plan. Determine what kind of car you want - be it a fuel-sipping Prius or a rugged Hummer - and set a price limit.
4. Search for your car at auction - and this is most important - BE PATIENT! Your car will come long! Patience, patience, patience... When your car does come, pounce!
5. Did I mention a budget and a plan? That's right, I did. Stick to them! And be patient! Give your search at least 2-3 months - if you want to save real dough!
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