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Used-car payments hit record $400 a month as prices top $20,000

November 16, 2018
Americans are spending more than ever for used cars.
The average price of a used vehicle hit an all-time high in the third quarter of 2018, according to car-buying advice site Edmunds. And at $20,084, the average price was up 3.5 percent from the same period a year earlier and up nearly 19 percent from five years ago.
And rising interest rates are driving costs even higher. 
The average American used-car buyer is now paying a record high of $400 per month — with loans averaging 66.9 months, according to Edmunds. That’s the longest ever.
"We’re still seeing prices ratchet up," said Ivan Drury, Edmunds’ senior manager of industry analysis. "It’s definitely changing the landscape of the used-vehicle market."
A shift in preferences toward larger vehicles — namely, SUVs and pickups — is one reason why average prices are moving higher. Passenger cars, which are falling out of favor, typically are sold for lower prices.
Monthly payments on a used Ford F-150 pickup average $492, while monthly payments on a used Toyota Corolla sedan average $295.
But cheap used vehicles are getting harder to find.
Five years ago, about one in four used vehicles were sold for less than $10,000. Today, the numbers are about one in six, according to Edmunds.
Consumers looking for a deal have the most success buying a passenger car, such as a compact sedan. 
"If you really do want to save yourself some money, that is definitely some advice I would give," Drury said.
Despite the increased costs of used vehicles, new vehicles are still much more expensive. Americans paid an average of $37,007 for a new vehicle in October, according to Cox Automotive.