The price of used cars will likely peak between April and May, according to a new report from the National Automobile Dealers Association (NADA).
The average price of a used car has increased by nearly $500, or about 4.3 percent, since the beginning of the year. Over the last month alone, the price has jumped 2.6 percent.
"While prices for all used-vehicle segments will remain stable over the next two months, compact and mid-size cars will appreciate in value and outpace other segments because of rising gasoline prices, shortage of inventory and strong consumer demand for fuel-efficient vehicles," said Jonathan Banks, executive automotive analyst for NADA.
A combination of reasons are affecting the change. For starters, many drivers are investing in auto maintenance and holding onto their cars longer. In fact, a recent study by Polk confirmed the average age of U.S. cars on the road is at an all time high. This is leading to less used cars for dealers - inventory is down 14 percent since 2009, according to NADA.
In addition, the desire to save money and find an affordable high-MPG vehicle is resulting in a heavy increase in price for cars like the Kia Rio and Toyota Prius, reports the news source.
Fortunately, it's also the best time for drivers looking to trade in their vehicles, as dealers are paying top dollar for vehicles in working condition. Those who have automobiles free of car repairs can cash in now if they're planning to offload their current vehicle.