Navigating the used car market in 2026 is no easy task. With tariffs and other factors at play, more people are searching for deals on reliable vehicles that won’t break the bank. Meanwhile, sellers want to understand what to expect and when to sell their cars. Whether you're a buyer or a seller, this article is for you. Keep reading to learn more about market trends, the best times to buy and sell and what to expect later in the year.
Overview of the Current Used Car Market
Tariff implementations have impacted the auto industry significantly, driving increased market activity as buyers turn to auctions to secure used inventory before demand and prices surge further. This trend is expected to continue, with higher prices likely in the coming weeks.
The recent imposition of 25% tariffs on imported vehicles and parts is anticipated to raise production costs, potentially leading to price increases for both new and used cars. As the cost of new vehicles continues to rise, many consumers are finding themselves priced out of the market and are instead turning to used cars as a more affordable alternative.
Key Trends in the Used Car Market in 2025–2026
Used Car Prices – Are They Going Up or Down?
As new car prices are climbing, more buyers are pushed toward the used car market. Experts warn that prices could rise even further, with estimates suggesting increases of $890 to $5,169 for popular models if tariff-driven demand mirrors the shortages seen during the pandemic.
Buyers are advised to monitor pricing trends using tools like Kelley Blue Book or Edmunds and be prepared to act quickly, as tariffs may make affordable used cars increasingly difficult to find.
Supply Chain Recovery and Inventory Levels
While the supply chain disruptions caused by the pandemic are largely behind us, new challenges are emerging. The chip shortage continues to impact vehicle production, making it harder for dealerships to replenish their inventories
Although inventory levels have improved since the pandemic, buyers should expect fewer affordable options, particularly as demand for used cars continues to rise. Flexibility and quick decision-making will be essential in this fast-moving market.
Financing and Interest Rates
Tariff-driven price hikes may lead to more expensive auto loans, as rising vehicle costs translate into larger loan amounts and higher monthly payments. Interest rates remain high compared to pre-2022 levels due to ongoing inflation, further increasing the cost of financing. As a result, monthly payments are higher than just a few years ago. It’s worth considering credit unions, which often offer lower interest rates than major banks.
On the other hand, some dealers are offering promotional financing to help move inventory, especially for certified pre-owned vehicles. Buyers with strong credit scores may qualify for favorable rates. It’s also a good idea to get pre-approved for a loan before visiting a dealership, as it can give you more negotiating power.
Trade-In Values and Equity Changes
As tariffs drive up new car prices, demand for used vehicles is surging, which may stabilize or even increase the trade-in value for popular models.
Cox Automotive predicts tighter inventories of used cars in 2025 due to a decrease in lease returns, which could help keep trade-in values competitive.
Be cautious of negative equity (owing more on your loan than your car is worth) as falling values and rising loan rates exacerbate this risk.
To ensure you receive a fair offer, it's important to get multiple trade-in estimates from dealers and assess your car's market value. Additionally, holding onto your vehicle a little longer may be beneficial if tariff-driven demand pushes used car prices higher.
EV and Hybrid Vehicles in the Used Market
Hybrids and EVs are reshaping the used car market. Electric vehicle resale values are declining more quickly than those of gasoline-powered cars.
On the other hand, hybrids are seeing significant demand, as they offer a sensible compromise: fuel-efficient without the concern of range limitations. As a result, used hybrids tend to retain their value more effectively than both EVs and traditional gasoline vehicles.
If you're considering purchasing an EV, be sure to examine the condition and warranty of the battery; most EV batteries are covered for 8-10 years.
Economic Factors Influencing the Market
Inflation and Consumer Confidence
Inflation is projected to range from 2.5% to 3%, impacting used car prices by increasing operational costs and reducing buyer purchasing power. High inflation erodes consumer confidence, leading buyers feel hesitant about making significant purchases, such as vehicles.
However, stabilizing inflation could boost consumer confidence, leading to higher demand for budget-friendly used cars, especially if new vehicle prices rise due to tariffs. Keep an eye on inflation trends and consumer sentiment to strategically time your purchase.
Federal Reserve Policies and Loan Accessibility in 2025
Interest Rates: Auto loan interest rates remain high. However, there is anticipation that interest rates may stabilize or even decrease later this year, which could boost demand by making financing more accessible and affordable. Understanding used car market trends is crucial for both buyers and sellers in navigating these fluctuating rates.
Loan Accessibility: A significant portion of used car transactions are financed, but the shifting economic landscape may create challenges in securing financing. Both buyers and sellers should be aware of potential obstacles regarding loan approvals and interest rates.
Best Time to Buy a Used Car
Spring (Late March - Early May): Historically, this period sees increased demand due to tax refunds, potentially driving prices up. It might be a less favorable time to buy.
Late Summer/Early Fall: As new car models are released, trade-ins increase, potentially leading to more inventory and better pricing on used models.
October and November: Edmunds' data suggests these months often offer the best discounts on used cars as dealerships aim to clear inventory.
End of the Year/Holidays: Dealerships might be motivated to meet sales targets at the end of the year, and holiday periods can see slower sales, offering negotiation opportunities.
Consider Acting Sooner Rather Than Later: Given potential tariff uncertainties, acting sooner in 2025 might be advantageous if you find the right vehicle at a comfortable price and interest rate.
How to Get the Best Value Right Now
Research: Track weekly used car price trends online to understand the current market.
Be Informed About Inventory: While overall used car inventory might be tightening, some brands might have higher inventory, offering better negotiation opportunities.
Negotiate: With longer selling times for used cars in 2025, buyers might have more power to negotiate prices. Don't be afraid to make a reasonable offer.
Consider Certified Pre-Owned Vehicles: CPO vehicles offer added peace of mind through warranties and inspections, which can be valuable in the current market.
Look at Different Vehicle Types: SUVs and small economy cars are currently popular. Consider your needs and be open to different vehicle types that might offer better value.
Tips for Navigating Financing Options
Shop Around for Loans: Compare offers from banks, credit unions, and online lenders to secure the best interest rate. Pre-approval can strengthen your negotiating position at the dealership.
Understand the APR: Focus on the Annual Percentage Rate, which includes all loan costs, not just the interest rate.
Consider Loan Terms Carefully: While longer loan terms offer lower monthly payments, they typically result in paying more interest over the life of the loan.
Be Wary of Add-ons: Carefully evaluate any extra warranties or services offered by the dealership, as they can significantly increase your total loan cost.
Explore Credit Union Options: Credit unions often offer more favorable loan terms and interest rates compared to traditional banks.
Factor in High Interest Rates: Be prepared for potentially high used car loan rates in early 2025 and factor this into your budget.
Key Factors to Watch in 2025
Tariffs and Economic Uncertainty: Tariffs on imported vehicles can push new car prices up. This, in turn, will increase the demand for used cars and raise prices later in the year. Make sure to follow tariff developments and stay informed.
Interest Rates: The Federal Reserve’s pause on rate cuts in 2025 means higher financing costs, which could dampen demand and affect prices. If rates drop later in the year, buyer activity may increase.
Vehicle Condition and Mileage: Cars with under 100,000 miles and strong maintenance records will command better prices. Older cars and those with high mileage face steeper depreciation.
The used car market forecast for 2025 is shaped by several factors, including the chip shortage and economic conditions. For sellers wondering, “How do I sell my used car for the best price?” staying informed about market trends will be critical. Timing the sale strategically can maximize returns, and highlighting features that are in demand, such as fuel efficiency or low mileage, can attract buyers in a competitive market.
If you're planning to buy a used car, be prepared for potential price fluctuations as demand rises.To navigate this, you should thoroughly research, monitor market trends and used car values and be flexible with your preferences.