If you're thinking of trading in your used car, chances are you'll get more now than in past years for the same make, model and age. The average value of 1- to 3-year-old used cars has risen from $15,000 in 2008 to more than $23,000 this year, according to analysis by Kelley Blue Book. The increase in value -- 16 percent on average -- is due to slow sales and leases of new cars, which is causing a greater demand for used cars.
Fuel-efficient cars and hybrids have seen some of the biggest increases in value due to high gas prices earlier this year, but as gas prices have declined, values have also dropped, offsetting some of those gains. Since June, subcompacts and compacts have dropped by 8 percent on average ($1,000) while hybrids have dropped 12.5 percent on average ($2,200), according to Kelley analysis. Despite the decline, these cars are still up an average of $1,400 since Jan. 1, though Kelley analysts expect values to continue to decline throughout the remainder of 2011.
One car segment that has seen continued declines is gas-guzzlers, which is comprised of full-size SUVs and pickups. These types of cars have declined 5 percent to 6 percent on average since Jan. 1, so car shoppers trading these vehicles may be faced with negative equity. Kelley analysts said that the decline was relatively modest and didn't expect it to accelerate dramatically, unlike in 2008 when the value of these vehicles dropped dramatically and some dealers refused to take these types of vehicles in trade.
In general, car shoppers who plan to sell their current cars privately or trade in their cars for a new model can expect to get a higher price for their 1- to 3-year-old cars -- at least for the next few months -- than they would have for the identical car in past years. Still, it pays to do your homework in advance of negotiating a trade or sale of your used car to ensure you are getting the best price possible. Determine your used car's value on a car pricing site, such as Kelley Blue Book, Edmunds.com or NADAGuides.com, and arm yourself with those numbers before you start negotiating.
Tara Baukus Mello writes the cars blog as well as the weekly Driving for Dollars column, providing both practical financial advice for consumers as well as insight into the latest developments in the automotive world. Follow her on Facebook here or on Twitter @SheDrives.