Used cars are in high demand, short supply - FOX13 News, WHBQ FOX 13

Used cars are in high demand, short supply

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MEMPHIS, Tenn. (FOX13) -

If you own a car that's only a few years old in good condition and gets great gas mileage then you can sell it for top dollar.

If you are looking to buy a pre-owned vehicle that's only a few years old get ready to spend some money. Used cars are almost as valuable as new ones, even if they don't cost as much.

It's a seller's market because certain used cars are in such demand and short supply.

"The used car market is stronger than it has even been right now," said Richard Hall of City Auto. "I think a lot of people can't afford a new car. The choice is a better quality used car with warranty protection."

The laws of economics can explain what revved the market. Auto makers scaled back on production during the recession and that limited the supply but not the demand.

Automotive analyst Ricky Beggs, the Vice-President and Managing Editor of Black Book, said that every new vehicle that is sold is creating a used car in the marketplace.

"Every new car that is sold is actually creating a used car in the marketplace at some point down the line," Beggs said. " So a  tremendous amount of used cars did not get sold for three or four years."

Financing also plays a factor. Rates on used car loans are low, some  are competitive with those for a new vehicle. The lending institutions are also fighting for customers with good credit.

"These auto manufacturers and their capitals offering zero percent, we have to get more competitive as well particularly in used car market," said Brian Cook of Orion Federal Credit Union.

For consumers it means now is the time to talk trade if you want to purchase new and time to dig into your pockets if you want to buy pre-owned.

The price of used cars will likely start to drop not until late 2014. Although it could change after a report that showed that in March was the best month in new car sales in the past five years.

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