Why? Comb your memory. What was happening three years ago? The economy tanked, and so did new car sales and leases. That means there is a dearth of three year old vehicles today for car dealers to sell. In particular, dealers are used to having a load of cars coming off thee year lease to populate their lots.
The average value of 1- to 3-year-old used cars has risen from $15,000 in 2008 to more than $23,000 this year, according to analysis by Kelley Blue Book. The increase in value, 16 percent on average, is also due to slow sales and leases of new cars, which is causing a greater demand for used cars.
Fuel-efficient cars, especially hybrids, have seen some of the biggest increases in value this year due to high gas prices earlier this year. But as gas prices have dropped off since the start of summer, so have values, offsetting some of those gains. Since June, subcompacts and compacts have dropped by 8 percent on average, while hybrids have dropped 12.5-percent on average, according to Kelley analysis. Despite the decline, these cars are still up an average of $1,400 since Jan. 1. But if gas prices continue to creep lower, their value will continue to slip the rest of the year.
Analysis by TrueCar shows that selling your used car privately, as opposed to trading it in, will especially pay off, eliminating the dealer's cut between what they pay for a trade-in and what they sell the car for to the next customer. You can gain thousands by listing on a site like autotrader.com, ebaymotors.com or right here at AOL Autos.
The best way to know what your used car is selling for is to look it up on AOL Autos research tool or TrueCar.com. Make sure to include the correct trim level and features when you are searching for the true market price.
Remember to take care and precautions if selling the car yourself to a private party.
We recommend going on the test drive with the prospective purchaser. If possible, have two adults go with the prospective driver if they are a stranger. Never let a stranger test drive your car without you.
View Gallery: Used Car Values Soaring