For automotive shoppers on a limited budget, used cars are a more affordable option than buying new. However, like new vehicles, used ones have considerably risen in price. The situation is so extreme that cheap used cars that cost under $20K are becoming rarer.

The number of cheap used cars that cost under $20,000 has dramatically dropped

In the past, used cars offered drivers affordable transportation. However, with the significant rise in prices, it’s now rare to get a quality one that won’t do some damage to your bank account. Per Edmunds, in the first quarter of 2018, over 60% of used vehicles sold for less than $20,000. In the first quarter of 2023, though, that percentage dropped to only 30%.

Also, the inflation problem isn’t only for more recent model years. It also affects older ones. For a seven-year-old car with 75,000 miles, the average price is still over $20,000. In an interview with Axios, Ivan Drury from Edmunds said, “It’s earth-shattering stuff to see that your 20K’s not going a long way anymore.”

Reasons for rising prices of used vehicles

With the pandemic and businesses shutting down around the world, the global supply chain, which the automotive industry relies upon, was impeded. The supply chain bottlenecks decreased supply while increasing demand for vehicles. This caused new car prices to skyrocket, which in turn, resulted in higher prices for used cars. 

For one, the cars entering the used vehicle market were priced higher. Also, people hesitant to buy new vehicles due to unaffordable prices turned to used instead, further increasing demand. 

Another reason for not many cheap used cars under $20,000 is Americans are opting for trucks and SUVs. Conversely, cheaper sedans are not as popular anymore. Also, trucks and SUVs are much more profitable for automakers. As a result, automakers have discontinued many of their sedan models. 

Could the prices come down?

In March and April 2023, the price of used cars surged 4.5%. However, the significant increase during this period might be due to many consumers using their tax refunds to buy a vehicle, resulting in higher demand and dealer markups. 

Also, there’s reason for hope, for the price inflation might have reached its peak. Edmunds noted how the average price of used vehicles in the first quarter of 2023 was $28,381, which is a 6.4% year-over-year decrease. However, cheap ones under $20K are rarer. 

Vehicles are lasting longer, so there’s a greater return on your investment

Automotive shoppers experience sticker shock from the high price of both new and used cars. However, the good news is that vehicles are lasting longer. So, in the long run, consumers get a greater return on their investment.

The average age of vehicles in the United States is now 12.5 years, which is an all-time high. In the past, 100,000 miles used to be a major milestone for vehicle longevity. Now, it’s not uncommon for cars to last over 200,000 miles.

Nonetheless, for those with budget limitations, it’s likely troublesome that there are not many cheap used cars that cost under $20K.