Hurricane Sandy to Blame for Rising Used-Car Prices
Along with the mud, the muck and the hardship that Hurricane Sandy left in her wake comes another unwelcome gift: higher used-car prices. The storm wrecked some 250,000 consumer vehicles. As drivers replace them, used-car prices could rise nationwide.
Sandy didn't skip over new-car lots; major dealers reported thousands of lost vehicles. But used-car losses are greater, and inventories were already strained. In recent years, people have been buying fewer new cars, resulting in fewer trade-ins. So an uptick in demand in a short period points to price hikes for pre-owned wheels.
Expect to pay about $700 to $1,000 more, on average, at least through February , says Lacey Plache, chief economist for Edmunds.com, with bump-ups most likely in the Northeast. Because used-car prices were trending lower seasonally before the storm, prices may remain stable when they would otherwise have fallen. But tax-refund season is typically strong for used-car sales, so don't look for prices to fall again until midyear, says economist Tom Kontos, at consultant Adesa Analytical Services.
A bigger problem will be a torrent of flood-damaged cars hitting the market. Title work might not reflect a run-in with Sandy. A free scan from Experian's AutoCheck will tell you if a vehicle has been registered or titled within the past 12 months in storm-affected areas; CarFax is offering free flood-damage info . Look for signs of water, mud or rust in unusual places and pay close attention to electrical wiring. Be suspicious of deals that are too good to be true.
This article first appeared in Kiplinger's Personal Finance magazine. For more help with your personal finances and investments, please subscribe to the magazine . It might be the best investment you ever make.