Good news for anyone looking for a used car or truck. These days you'll find a larger selection of late-model vehicles on the lot — and in some cases, pay less than expected. You might even be able to lease a fairly low-mileage certified pre-owned vehicle.
"It's a great time to buy a used car," said Michelle Krebs, senior analyst with Autotrader. "We're seeing used car prices drop from what had been record highs because the supply is increasing. The supply is up, so the prices are going down."
And those prices may continue to fall. In March, wholesale prices at used car auctions around the country were down 1.6 percent from the year before, according to the Manheim auction company.
You'll find some of the best deals right now on small and midsize cars, Krebs told NBC News. These would include the Honda Civic, Ford Focus, Toyota Camry and Chevy Malibu.
On the flipside, you may get less for your trade-in, especially if it's a small car or mid-size sedan, Krebs said.
The popularity of leasing in the new car market is driving this flood of used vehicles. About 30 percent of all new cars are now leased, and most people don't buy them at the end of the contract.
Jonathan Banks, executive analyst with the National Auto Dealers Association (NADA), told CNBC's "Trading Nation" there will be 800,000 more lease returns hitting the market this year than in 2015.
The NADA Used Car Guide predicts a five to six percent drop in used car prices this year, the first significant price decline in eight years.
And it looks like the supply-demand curve will be out of balance for some time to come. TrueCar.com expects a 10 percent increase in the supply of one- to five-year-old vehicles from now through 2018.
Used car sales strong
For millions of Americans, a used vehicle is the best — or sometimes only — option. Sales of pre-owned cars and trucks are going strong: 38 million sold last year, up 5.6 percent. The average price hit a record high of $18,600 last year, according to the 2015 Used Vehicle Report from Edmunds.com.
Edmunds.com analyst Ivan Drury told NBC News the price decline is not across the board. While the price of subcompact, compact and mid-sized cars is flat or down, prices are up for SUVs, crossovers and pickup trucks, which are very popular with today's low gas costs
"If you're looking for a car, up to 5 or 6 years old, you're good. If you're looking for a pickup truck or SUV, you're going to pay a bit more regardless of the age range," Drury said.
Would you like to lease that used vehicle?
With so many used vehicles to move off the lot, some dealers and lenders are offering the leasing option for certified pre-owned (CPO) makes and models. CPO vehicles must meet certain age (typically no more than three or four model years) and mileage limits, and pass a dealer's inspection program.
Ally Financial now offers its Pre-Owned SmartLease on 15 brands and nearly 40 models. The program rolled out nationwide earlier this year following a successful pilot test.
BMW of North America, Toyota and Lexus also see certified leasing as a way to get more people into used vehicles.
"It's not a 90-day program. It's part of a long-term strategy," Mike Wells, group vice president of sales, marketing and product for Toyota Financial Services, told Automotive News recently.
Beepi, a new online used-car buying service based in San Francisco and available in nine states, just added the lease option for 2013, 2014 and 2015 models. Mileage restrictions are more generous than most new car leases, 15,000 rather than 12,000 miles.
"We can offer lower monthly payments and more flexibility," Beepi's Kyle Thibaut told NBC News. "You get a lot of savings and a fairly new vehicle."
Used car leases are still a small part of the market, just under four percent of all transactions right now, according to Experian. But that could change if more manufacturers embraced the concept and offer low interest rates as an incentive to lease used, as they did with new vehicles.
"There's no doubt that this is going to grow," Thibaut said. "We've seen the activity and the buzz around it to be more than expected, so I can only expect this to grow as the used supply coming back from new leases continues to be at all-time highs. It's going to be a very favorable environment for used-car leasing."
Eric Lyman, chief analyst at TrueCar.com, thinks used-car leasing will appeal to millennials and turn out to be a cost-effective way for automakers to introduce their brands to this coveted demographic.
"You have something that you call your own for a fixed period of time. Think of the smartphone with a two-year contract. That's a similar concept to leasing," Lyman said. And as a retail experience, it's a concept that millennials are very well acquainted with."
A note of caution
"As with all automobile leasing, it's always going to cost you more to lease the car than to buy it," said Jack Gillis, author of The Car Book 2016. "And with today's low interest rates for used cars, it really pays off to make the higher monthly payment, so at the end of the term you own a tangible asset rather nothing."
If the only way you can afford a particular vehicle is because of the low monthly lease payments, you should reconsider that vehicle and maybe look for a less expensive car, Gillis advised.