Rising Used Car Prices in 2025: What’s Driving the Surge?

Why Prices Are Still Rising

Low supply from past shortages

The biggest factor is limited inventory. Automakers produced far fewer vehicles during the pandemic, especially in 2020–2022, thanks to supply chain issues and the chip shortage. That means fewer cars made it into the used market. Typically, leased vehicles come back after two or three years and feed dealer lots—but leasing rates were way down during those years. In 2025, we’re still feeling the ripple effects.

High demand

Even with prices up, people still need cars. Some waited out the wild swings of 2021–2022 and are now returning to the market. Others can’t afford new vehicles, which now average over $47,000. For many, used cars are the only realistic option, especially as interest rates remain high.

Interest rates push more shoppers toward used

Auto loan rates are hovering around 11% for used vehicles. That’s expensive, but it’s still lower than what some buyers face when financing new. Higher rates also push many buyers into cheaper vehicles—usually older models—which increases demand for affordable used cars.

Low inventory, especially for budget cars

Dealer inventory is tight across the board, but it’s especially bad in the under-$15,000 segment. There’s just not enough older, reliable cars available. Many drivers are holding onto their vehicles longer (the average car on the road is 12.6 years old), which means fewer trade-ins are hitting the used market.

Tariff and economic jitters

Talk of new tariffs on imported cars and parts in early 2025 pushed some shoppers to buy quickly, anticipating higher prices. Even a hint of supply disruptions tends to create surges in demand, which leads to short-term price spikes.

What Buyers Are Dealing With

Fewer choices in the most popular price range

Most used car shoppers want something reliable in the $15,000–$30,000 range. But that’s also where inventory is thinnest. Cars in that sweet spot are selling fast, especially if they’re newer, low-mileage, and come from trusted brands like Toyota, Honda, or Ford.

Late-model cars are scarce

There just aren’t that many 2- to 3-year-old vehicles in the used market right now. That’s because not as many were sold or leased new in 2021–2022. So if you’re looking for a near-new car, be prepared to pay a premium.

Older cars are getting pricier too

Even high-mileage cars that used to sell for $10,000 or less are now going for more. Inexpensive, reliable used cars have become harder to find, and budget shoppers are competing over what’s left.

Used electric vehicles are an exception

Used EV prices have actually dropped a bit, thanks in part to price cuts on new EVs. If you’re open to an electric car, there are some decent deals out there—especially on used Teslas and older Nissan Leafs.

Advice If You’re Buying

• Expand your search. Don’t just look at your local dealership. Check online platforms, nearby cities, and franchise and independent lots. A little travel might save you a few thousand dollars
• Consider older but well-maintained cars. A 6- or 7-year-old model might be a better value than an overpriced 3-year-old one
• Get pre-approved. Lock in your financing before shopping so you know what you can afford. Credit unions often offer better rates than dealers
• Move fast if you find something good. In-demand used cars don’t stay on the lot long

Advice If You’re Selling

• Now is a great time to sell. If you’ve got a reliable vehicle in decent condition, you’ll likely get top dollar
• Get multiple offers. Check with online services like Carvana or CarMax, then shop those offers at local dealers. You might be surprised how much they’re willing to pay
• Clean and prep your car. Even a basic wash, vacuum, and oil change can help you boost your asking price

The Bottom Line

Used car prices remain high in 2025 due to low supply, strong demand, and lingering effects from the pandemic-era auto market. If you’re buying, expect to pay more than you would have a few years ago—but smart shopping and good timing can still land you a solid deal. If you’re selling, you’re in a strong position—just make sure you’re ready for what comes next if you need to buy another car.