I just bought a Jeep for my teen driver. Here’s what I learned about the used car market

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When I was a teenager, I bought my first car. It was a Toyota Tercel with a few hundred miles on it and cost less than $10,000. Granted, this was 30 years ago.

Now that I have a daughter turning 17, I envisioned a similar scenario. She has worked — and saved — since the age of 13, and I assumed she could at least pitch in for a reasonably priced pre-owned model.

But, boy, has the used car market changed. For starters, prices have increased enormously.

Anyone who has stayed away from the car market in recent years is in for a massive shock, Ivan Drury, Edmunds’ director of insights, told me. “It does not resemble anything that you were accustomed to.”

For used cars, the average listing price is now $25,361, according to the latest report from Cox Automotive, a giant jump from just five years ago, before the pandemic disrupted supply chains and sent prices for new and used vehicles skyrocketing.

“Affordability remains challenging for consumers, and supply is more constrained at lower price points,” the report said.

For new cars, the average transaction price is $47,823 as of October, near an all-time high. There are fewer options available at lower prices. Spoiler alert: It’s nearly impossible to find a car for less than $30,000.

Now, 10% of all vehicles sold cost more than $70,000, up from 3% five years ago, according to Edmunds. Just 0.3% of new vehicles sold now cost less than $20,000, compared with 8% five years ago, Edmunds found.

Cars these days are loaded with high-tech features, including touch screens, 360-degree cameras and heated seats, which have driven prices up substantially, according to Drury.

“Technology is flooded across the dash and all through the vehicle,” he said. “They are so capable, it’s borderline crazy.”

Hunting down a used Jeep

A Jeep was at the top of my daughter’s wish list, and Wranglers, especially, have held their value.

A recent iSeeCars study analyzed more than 2 million cars to see which used models are priced the lowest and offer the longest remaining lifespan. A 10-year-old Wrangler Unlimited ranked a respectable 18th among SUVs on the list.

But the average price for a 10-year-old Wrangler is still $23,381, and older cars with more mileage will increase the cost of ownership, experts say. 

Plus, we wanted something newer, since, in 2018, Wrangler rolled out advanced safety features and made significant improvements in fuel efficiency and technology, compared with older models.

That means paying more upfront: A Jeep Wrangler “is not the cheap car from 10-15 years ago,” Drury said.

A Jeep dealership in Shrewsbury, New Jersey
Jessica Dickler | CNBC

Sites such as Cars.com and Carvana have helped level the marketplace, but prices were still high online. We had better luck searching used inventories at dealerships within a 50-mile radius from home. A Jeep Chrysler Dodge dealership in Shrewsbury, New Jersey, had two 2021 models that fit our criteria and our budget.

According to Drury, it’s harder for car buyers to negotiate now that prices are more transparent. Dealerships do offer incentives but are less willing to knock down the sticker price. “Because we have so much information, it’s very difficult to charge a different price from your competitors,” Drury said.

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The best bet is to snag a financing offer, he advised, which could mean saving money by securing a lower interest rate on an auto loan. The average interest rate on a four-year used car loan is currently 8.21%, according to Bankrate.com, but good credit scores often pave the way to substantially better loan terms.

Still, we were able to negotiate down a few fees that were tacked on at the point of sale.  

In the end, though, we did spend more than we initially planned — and that didn’t include the added expense of insuring a teen driver.

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