Jeremy Barnes
Chuck Burton  /  AP
Jeremy Barnes poses in front of the 2007 Honda he is selling near his home in Greensboro, N.C., April 20, 2011. With used-car prices at 16-year highs, and a child on the way for him and his wife, Barnes is hoping to sell it for a good price and most likely spend more on the new car they buy.
By
updated 5/18/2011 3:07:33 PM ET 2011-05-18T19:07:33

It's the best time in years to sell your car.

People are holding on to cars and trucks for about a year longer than they did before the recession, which has created a tight supply of used vehicles. So few are on the market that prices have risen to their highest in at least 16 years.

Dealers are paying an average of $11,660 for a used car or truck, up almost 30 percent since December 2008.

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"You're not going to find a situation like this very often," says Jonathan Banks, executive auto analyst for the National Automobile Dealers Association used car pricing guide.

The run-up in prices for used cars has been so dramatic that it almost doesn't make sense to buy them anymore, says David Whiston, an auto analyst for Morningstar. That's probably a good indication that prices are at or near a peak.

"For just a little bit more I can buy a brand-new car," he says. "There's a tipping point. I think we are getting very close to seeing that."

Take the Honda Accord, known for reliability and holding its value. A dealer would sell a 2008 four-cylinder Accord LX sedan in good condition with about 45,000 miles on it for $16,175.

With no down payment and a loan at 5 percent interest, it would cost $373 a month to pay off the Accord in four years. But Honda is offering a three-year lease on a new 2011 Accord for just $250 a month. The company will even make the first payment. You still have to pay $600 up front and 15 cents for each mile you drive over 12,000 a year.

In Greensboro, N.C., Jeremy Barnes and his wife are expecting their first child, so they decided to replace a white 2007 Accord with a bigger, new vehicle. He wasn't sure what they could get for the Accord when he checked prices on the Kelley Blue Book website.

"I was pleasantly surprised," says Barnes, 30, a heating and air conditioning equipment salesman.

He's asking $15,200 for the car, which is in good shape and has 47,000 miles on it. While waiting for a buyer, the couple are looking at vehicles like the Jeep Grand Cherokee.

The rise in used-car prices is a byproduct of the recession. The average car on the road now is 10.6 years old, according to the Polk research firm. That's up from 9.8 years in the middle of 2007, a few months before the recession struck and people began to rethink major purchases.

Another source of used cars got choked off when credit tightened during the 2008 financial crisis and car companies cut back on leasing new ones. Companies sell leased cars as used when leases expire.

Japan's earthquake and tsunami are also driving up the price of some used cars. New models of some small cars, such as the Toyota Prius and Honda Fit, are expected to be in short supply. Dealers are buying used ones to sell in their place. That won't last, though.

Story: Jilted by one Chinese suitor, Saab finds another

Manheim, a big auction house where dealers buy used cars, says prices this year are the highest since the company began collecting data in 1995. Tom Webb, chief economist there, predicts that used-car prices will rise for around two more months and then level off. They may fall in 2012 and beyond as more used cars come on the market.

There are already signs that used-car prices will come down. Leasing was 21 percent of U.S. sales in February, which was up from 11 percent in 2009, according to Experian Automotive. That should bring more used cars onto the market as three-year leases end.

Banks and auto company finance arms have also loosened up credit for people with poorer credit ratings, meaning more buyers can get a loan for a new car.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Explainer: Ten cars with surprising gas mileage

  • Image: 2011 Chevrolet Corvette Coupe
    GM  /  Wieck
    The 2011 Chevrolet Corvette Coupe delivers an impressive 26 mpg on the highway.

    Everyone and his goldfish knows that you can get good gas mileage by driving a Toyota Prius. But many of us want to buy cars with features that typical high-mileage economy cars don’t provide.

    Those requirements don’t have to doom us to terrible fuel economy; we just have to choose our cars more carefully. So here’s a list of 10 vehicles with unexpectedly good fuel economy for their size and/or vehicle type.

    (Note: This is not a list of the 10 vehicles with the best fuel economy; you can find that list on the EPA’s website).

  • Audi Q7 TDI

    Audi

    EPA MPG city/highway/combined: 17/25/20
    Drivetrain: 3.0-l V6 diesel, 8-sp man.
    Vehicle category: 7-seat SUV

    With the Q7 you really can average 25 mpg on a long trip in a sure-footed quattro all-wheel-drive, three-row, seven-seat SUV. You do have to fuel it with diesel, which costs a bit more than gasoline, but you will only have to do that every 600-something miles. And you won’t pay any other penalties because the performance and smoothness of the drivetrain are indistinguishable from that of a comparable gas turbo V6.

  • Buick LaCrosse eAssist

    GM  /  Wieck

    EPA MPG city/highway/combined (estimated): 25/37/31
    Drivetrain: 2.4-l 4-cyl. Hybrid, 6-sp auto
    Vehicle category: mid-size car

    Here’s a midsized Buick — with all the luxury the brand implies — that delivers 37 mpg on the highway. The old advertising slogan was “Wouldn’t you really rather drive a Buick?” The answer to that question for many

    years was “no,” but now that the company’s products have become excellent, if the alternative is some cramped, buzzy econobox, here’s your 37 mpg solution. Because of the compact size of the “eAssist” mild hybrid system, the rear seats fold flat for a pass-through from the trunk — a feature that isn’t available in full hybrid sedans because the space behind the seat is occupied by electric drive electronics.

  • Chevrolet Equinox

    GM  /  Wieck

    EPA MPG city/highway/combined: 22/32/26
    Drivetrain: 2.4-l 4-cyl, 6-sp auto
    Vehicle category: SUV

    Compact SUVs are the new family cars for many consumers, but even though they aren’t gargantuan ground-pounders, they can still get pretty mediocre fuel economy, especially when equipped with a V6. Chevy has dropped in a brawny-but-smooth four-cylinder that delivers 32 mpg in highway driving, and buyers have been snapping them up as fast as the company can build them.

  • Chevrolet Corvette

    GM  /  Wieck

    EPA MPG city/highway/combined: 16/26/19
    Drivetrain: 6.2-l V8, 6-sp man.
    Vehicle category: two-seater

    No one buys sports cars for their fuel economy, but wouldn’t it be nice if some ludicrously fast 430 hp rocket also delivered 26 mpg on the highway? Well, here it is. The Corvette will crank out mile after mile of mid-20s mileage while you’re on the highway driving to the best curvy mountain roads or some distant race circuit for a bit of track day fun.

  • Ford Fusion Hybrid

    Ford  /  Wieck

    EPA MPG city/highway/combined: 41/36/39
    Drivetrain: 2.5-l 4-cyl. hybrid, CVT
    Vehicle category: midsize car

    Here’s the most efficient vehicle on this list, with 39 mpg in combined driving — the 41 mpg city, 36 mpg highway Ford Fusion Hybrid. It doesn’t carry the humpbacked styling or overt political connotations of a Prius, but it does deliver nearly the same gas mileage in a vehicle with a more comfortable ride and vastly better handling.

  • Ford F-150

    Ford  /  Wieck

    EPA MPG city/highway/combined: 17/23/20
    Drivetrain: 3.7-l V6, 6-sp auto
    Vehicle category: full-size truck

    It takes energy to move a load, and that energy comes from gas. Trucks burn more gas than cars even when they aren’t hauling loads because they are built big and sturdy enough to withstand heavy-duty use. That has typically meant that gas mileage ranged between “dismal” and merely “bad.” But Ford’s new V6-powered F-150 has achieved the widely accepted threshold of “decent” gas mileage — 20 mpg. That’s the truck’s combined EPA rating, and they EPA says it can do even better on the highway at 23 mpg. Our testing scored 20 mpg highway too, but other reviewers did better. Regardless, it is a big step forward considering that old trucks wouldn’t go 20 miles on a gallon of gas even if they started driving atop the Continental Divide.

  • Honda Odyssey

    Honda  /  Wieck

    EPA MPG city/highway/combined: 19/28/22
    Drivetrain: 3.5-l V6, 6-sp auto
    Vehicle category: minivan

    Remind me: Why do we call these things “minivans” again? They were pretty small when they started out, but now they are 4,500-pound, eight-passenger behemoths. It would be asking a lot for something this big to get reasonable gas mileage, but the Odyssey delivers, using cylinder deactivation to run on three cylinders when possible, along with a six-speed transmission to get the power to the wheels as efficiently as possible.

  • Hyundai Sonata

    David McNew  /  Getty Images

    EPA MPG city/highway/combined: 24/35/28
    Drivetrain: 2.4-l, 6-sp man.
    Vehicle category: large car

    The Hyundai Sonata has a smidge more interior space than the Fusion or LaCrosse and rates 35 mpg highway with its base engine and transmission. Hyundai also offers a hybrid version, but the everyday model provides 35 mpg on the window sticker, and anecdotal evidence says it will even get 40 mpg on the highway.

  • Hyundai Elantra

    Hyundai

    EPA MPG city/highway/combined: 29/40/33
    Drivetrain: 1.8-l 4-cyl, 6-sp auto
    Vehicle category: Compact car

    Forty mpg might be a stretch for the Sonata, but the compact Elantra should do that without breaking a sweat, according to the EPA’s 40 mpg highway rating. As with the bigger Hyundai, the Elantra achieves its segment-benchmark fuel economy rating with its base drivetrain, so the hundreds of thousands of Elantras the company sells will all contribute to the fleet of 40 mpg cars on the road. This is in contrast to the special, high-efficiency models from competitors, which cost more and will account for a paltry few percent of sales.

  • Volkswagen Passat

    Volkswagen

    EPA MPG city/highway/combined (estimated): 31/43/35
    Drivetrain: 2.0-l 4-cyl. diesel, 6-sp. dual-clutch auto-manual
    Vehicle category: large car

    If the diesel engine in the Q7 can get 26 mpg on the highway, what could one in a slippery sedan achieve? According to VW, the answer will be 43 mpg when the EPA’s official numbers are announced. That means the Passat will go more than 800 miles on a tank. Those of us who love pumping gas in the freezing cold or blazing heat might miss standing out in the weather regularly, but for the rest of us, incredible efficiency matched with a large fuel tank combine to provide unprecedented freedom from pumping fuel.

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Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
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