Used Car Inventory Rising, But Affordable $20K Cars Harder to Find

The consumer price index indicates that the cost of used cars decreased by 2% in January compared to the previous year.
However, certain buyers might be surprised by the prices if they haven't purchased a vehicle in some time: The typical cost of a pre-owned car aged up to 8 years in 2025 reached $30,202, marking an increase of 27.6% compared to $23,668 in 2020, as reported by J.D. Power.
The percentage of vehicles costing less than $20,000 was 30% in 2025, a decrease from 53% in 2019.

Even though experts expect a greater availability of used cars this year, consumers are likely to experience limited savings on prices.pricing.

Although dealer stock levels are gradually improving, the higher-expense range of vehicles entering the used car market — andhigher wholesale pricesIn January — might restrict how much the increased supply leads to lower car prices.

Although the consumer price indexindicates that used car prices dropped by 1.8% in January compared to December and 2% from the previous year, showing a decline from record peaks. The average price of a used car aged up to 8 years reached $30,202 in 2025, marking a 27.6% increase from $23,668 in 2020, as reported by J.D. Power.

"Vehicles priced under $20,000 are more difficult to locate," stated Jonathan Banks, a vice president at J.D. Power.

That is expected to continue even with better stock levels. "You'll witness a more diverse range of vehicles," Banks stated. "That's simply the reality."

The percentage of vehicles priced below $20,000 accounted for 30% in 2025, a decrease from 53% in 2019, as reported by J.D. Power.

Since consumers are keeping their vehicles longer, the current higher prices might come as a surprise to them, according to Banks.

"Many individuals will enter the market again after not being involved for a while," he stated.

Financing a used car can be frustrating.

Even though used car prices have decreased, they are still high compared to the overall household situation.affordabilitycrunch. A significant number of customers are already finding it difficult to manage the rising expenses for daily necessities such ashousing, groceries and insurance costs.

In comparison to the typical cost of a new vehicle —$49,191, as reported by Kelley Blue Book— the pre-owned vehicle market could be the more appealing choice.

Nevertheless, the expense of funding a pre-owned vehicle can also be a drawback.Interest ratesusually are higher compared with those that apply tonew car loans, which may be particularly expensive for individuals with bad credit.

For individuals with credit scores between 501 and 600, the typical interest rate on used car loans was 19% during the third quarter of 2025, as reported by Experian. This contrasts with an average rate of 7.43% for those having a score from 781 to 850.

The typical loan amount for a pre-owned car in January was $29,364, with an average interest rate of 10.5%, as reported by Edmunds.

If this amount was borrowed at that interest rate for 72 months — the average term is 69.7 months — the monthly payment would be $551, with a total interest of $10,339 paid over the entire loan period, according toBankrate's auto loan calculator. This would increase the total cost of the car to $39,703.

In addition, a small but increasing portion of customers are obtaining loans for pre-owned vehicles with aA monthly payment of $1,000 or higher, according to Edmunds. In the last quarter of 2025, 6.3% of buyers made a commitment to pay this amount, compared to 6.1% in the third quarter and 5.4% in the fourth quarter of 2024.

Growing inventory, possible discounts

The range of pre-owned vehicles available indicates the types of cars that have been bought in the new car market over time. For many years, consumers have favored SUVs and trucks compared to sedans. Last year, sedans made up only 17% of the new car market,according to EdmundsIn 2015, the percentage exceeded 40%.

More vehicles are returning from three-year leases this year than in the previous year, according to Ivan Drury, director of insights at Edmunds, as lease activity increased in 2023 compared to 2022. Moreover, an increasing number of fleet vehicles—such as rental cars—are expected to enter the used car market this year, as this supply remains on the path to recovery from disruptions caused by the pandemic.

As automobile manufacturers increase the number of promotions they are providing for new vehicles, buyers of pre-owned cars might also gain advantages, according to Drury. "Once we begin to observe reductions on new cars, this effect eventually reaches used cars," he mentioned.

If you haven't purchased a vehicle in some time, refresh your knowledge on the top methods for buying a pre-owned car.

"Conduct your research," Banks stated. Some approaches he suggests:

Check out certified used cars. "You might be able to find a newer vehicle with limited miles and a warranty," he mentioned.

Ensure you trust the dealer and have thoroughly checked the car you intend to purchase, he said. You can review a vehicle's history through websites such as Carfax or AutoCheck, which charge between approximately $10 and $45.