Tax season is in full swing, and some consumers will use their refund toward a down payment on a big-ticket item, such as a car. But will the buyer choose a new or used car?
Used cars have become more popular, and the reason is somewhat obvious. The average cost of a new vehicle in November 2025 was $49,814, according to Kelley Blue Book. In November 2024, new vehicle costs averaged $48,724, and in November 2023, they averaged $48,247. The upward trend is expected to continue.
Many consumers may choose to purchase a used car rather than pay the price of a new vehicle. But is a used car a better deal? Prices have been volatile since the pandemic. Have used car prices settled down to be more affordable and a better option than new vehicles?
Used Car Prices Crack $25,000 in 2021
The COVID-19 pandemic led to price fluctuations for both new and used vehicles. At the height of the pandemic, semiconductor chip shortages and other supply-chain disruptions slowed and, in some cases, halted, production.
When the new car inventory decreased, new and used car prices skyrocketed and remained elevated.
According to MarketWatch, in 2021 used car prices soared to a new all-time high of $25,463. It was the first time the average price of a used car exceeded $25,000.
Supply Pressure Pushes 3-Year Vehicle Prices to Over $30,000 in 2025
Although new car inventories had recovered so that prices stabilized, used car prices didn’t follow. They remained as high or higher.
According to Edmunds, in the fourth quarter 2025, the sales price of a three-year-old vehicle averaged $30,699. Three-year-old cars are considered the sweet spot in age for car buyers.
These used vehicles retained 66 percent of their original manufacturer’s suggested retail price (MSRP), which was $46,233 reported Edmunds. This was down from the 2024 fourth quarter, when three-year-old vehicles retained 74 percent of their original MSRP.
The pricing environment was driven by supply challenges in the used car market. A sharp drop in leasing vehicles through 2022 and 2023 and fewer new car sales overall due to low supplies meant fewer used cars being returned to dealerships to be sold as used.
Newest Used Cars Created Value for Buyer in 2025
The newest used cars that saved consumers in the fourth quarter of 2025 were current model-year used vehicles or 2025 models sold as used. These vehicles were on average $6,370 less than new vehicles. They accounted for one in 12 used vehicle sales and gave shoppers opportunities to save.
Used Car Wholesale Prices Rise in 2026
According to Kelley Blue Book, wholesale used vehicle prices increased in January 2026. The Manheim used vehicle value index rose to 210.5, translating into a 2.4 percent increase in used vehicle prices. The index considers mileage and seasonality.
Despite the increase in the Manheim, Carfax, reported used car prices dropped in January 2026, but were climbing in select categories for March.
This is normal for this time of year, because most Americans receive their federal and state tax returns and often use them as down payments on vehicles, according to Carfax.
The jury is still out on whether consumers will see lower used car prices. There are still shortages. And even if prices decrease by a point or two, used car pricing will still be higher than pre-pandemic levels.
Best and Worst Times to Buy Used Cars
Pricing for used cars is affected by inventory, but the time of year also determines when you can find the best deal.
According to iSeeCars, calendar months follow the same trend as holiday rankings for deals on used cars.
There are holidays when it’s best to head to the dealership to save on used cars. For example, for the best deals on used cars, shop on these days:
- Martin Luther King, Jr Day: 65.5 percent more deals
- New Year’s Eve/New Year’s Day: 58.6 percent more deals
- Presidents’ Day: 47.0 percent more deals
- Veterans Day: 23.1 percent more deals
- Christmas Eve: 15.2 percent more deals
Certain holidays should also prevent you from used car shopping. The worst days to receive a deal include:
- July 4: 22.4 percent fewer deals
- Father’s Day: 19.7 percent fewer deals
- Juneteenth: 19.7 percent fewer deals
- Memorial Day: 18.0 percent fewer deals
- Mother’s Day: 9.2 percent fewer deals
Some holidays aren’t the only time to save; lower weather temperatures equal lower prices. In contrast, used car prices rise with the temperature. May, June, and July are the worst times to buy a used car, while January, February, and December are the best times to purchase a used car.
Used Car Pricing Volatile
Since the COVID-19 pandemic, used car prices have been erratic. Semiconductor chip shortages and other supply constraints have driven price increases in both new and used cars. And although new car prices have plateaued, used car prices for three-year-old cars remain high.
For the best price, try to be aware of the season and holidays when good deals may be available.
The gap between new and used cars appears to be narrowing. Ensure you do the proper research before making the dealership rounds. This will help you make an informed decision about whether to purchase a used vehicle.
The Epoch Times copyright © 2026. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.
