Is Now the Time to Buy, Sell, or Trade-in a Car?

Quick Facts About the Buying and Selling Marketplace

• Now is a great time to buy a car before tariffs trickle down to new vehicle prices at dealerships.
• New car prices held steady in March compared with the previous month and year, but that’s soon to change. Used car prices were up slightly from the month earlier but down from last year.
• Tariffs will radically change prices over the next few months.

Consider this the relative calm before the storm as car prices for new and used vehicles held steady in March. It’s anyone’s guess what will happen when tariffs on new cars and car parts trickle down to consumers. Tariffs could change car shoppers’ plans in a way only major events like wars and the COVID-19 pandemic ever have. Still, the White House is considering another pause, which could change the trajectory of the marketplace for car buyers.

Car shoppers who head out to the sales lot soon could find the last vestiges of that good market.

We never advise anyone to rush into an expensive purchase that, for many, involves taking on years of debt. If you’re on the fence about shopping this year, you might still want to batten down the hatches and ride out the chaos in your existing car.

We’ll explain what to expect while buying or selling a new or used car or trading one in, and why it might make sense to act quickly.

• What New Car Shoppers Can Expect
• Tariffs Could Push Up Prices of New and Used Cars
• What Used Car Shoppers Can Expect
• Older, Less Expensive Cars Harder to Find
• Automakers Are Building More Expensive Cars
• How to Buy a Car Right Now
• Selling a Car Right Now
• Trading in a Car Right Now
• Looking Ahead
• Tips for Buying a Vehicle Right Now

What New Car Shoppers Can Expect

Kelley Blue Book data show the average new car sold for $47,462 in March — about flat from last year and February’s price of $47,577.

Even that figure is unrealistically high. Americans bought plenty of six-figure high-end luxury cars last month with an average transaction of $119,740, making the average look higher. In the compact SUV segment — America’s best-selling — buyers spent an average of $36,262, the data show.

We find that time, not money, is the best way to understand how a new car impacts your finances. The Cox Automotive Moody’s Analytics Vehicle Affordability Index shows how long the average earner would need to work to pay off the average new car. It now sits at its most affordable figure since the summer of 2021. Cox Automotive is Kelley Blue Book’s parent company.

Most automakers bulked up their inventory in preparation for tax refunds and the spring selling season. It’s a good thing they did because the threat of tariffs drove shoppers to buy cars, with sales jumping nearly 30% higher in March than the previous month.

Tariffs Could Push Up Prices of New and Used Cars

President Trump enacted two rounds of new tariffs that could radically change car prices in the United States.

Beginning April 3, many imported cars became subject to a 25% tariff. Additionally, parts face a similar fate on May 3, if the White House does not pause tariffs.

Every vehicle made in North America uses parts made elsewhere, so all prices will increase. But it’s hard to say how much. The auto industry must wait for new government rules explaining how officials will enforce the tariffs before knowing what price increase affects each car.

It’s likely that the cars on dealer lots today were all imported at pre-tariff prices. However, dealers could try to negotiate higher prices with shoppers for those cars to obtain the cash they’ll need to replace them at post-tariff prices.

We expect that phenomenon to reach each brand, even each dealer, at a different time. Your best tool for understanding local price changes is the Kelley Blue Book Fair Purchase price, which we calculate using recent transactions for that car in your area. We update each Fair Purchase Price weekly, showing you how tariffs and tariff anxiety are impacting the price of the specific vehicle you’re interested in where you live.

The Fed Is Likely to Pause Interest Rate Cuts

Prices are all cash buyers need to worry about. However, few car shoppers are cash buyers. Most Americans borrow money to buy a new car.

The Federal Reserve, commonly called “the Fed,” sets the federal funds rate, the interest rate that banks use when they lend each other money. The federal funds rate determines rates for every type of loan, including car loans. It’s finally on the way down, which should ripple through the economy over the next few months.

The Fed had hoped to continue cutting rates through much of 2025. Due to economic uncertainty, the central bank has pulled back and kept rates flat in recent months. The credit market is unlikely to improve in the short term while banks, like the rest of us, wait to see how tariffs impact car shopping.

What Used Car Shoppers Can Expect

The average used car was listed for $25,180 at the start of April — $169 more than a month ago, and down slightly from last year.

The increase came as a result of low supply of used cars. The nationwide used car supply will likely remain thin for years. Pandemic-era disruptions meant automakers built about 8 million fewer cars than they would have in 2021 and 2022. Millions of cars will never reach the used market, keeping supplies low for a long time.

Tax refunds, a key driver of used vehicle sales, averaged $3,170, up 4% year over year. While the pace of used vehicle sales typically increases this time of year with the influx of tax refunds, this year’s 12% increase compared with last year during that timeframe is the most significant jump seen since 2021.

The least expensive used cars remain the hardest to find.

Older, Less Expensive Cars Harder to Find

If you hope to find an older vehicle and your budget is less than $15,000, these cars remain in short supply. Dealers hold just 28 days’ worth of the older, higher-milage cars they sell for under $15,000, seven days lower than at the same time last year.

However, the tariff threat could push used car prices higher. When new car prices rise, would-be new-car shoppers head to used lots looking for something still in their price range. More would-be new car shoppers started buying up the available used vehicles, drawing down the inventory. Plus, Americans are holding onto their cars longer than ever. The average vehicle on American roads is now 12.6 years old. Automakers also produced fewer cars for several years after the 2008 recession, leaving fewer higher-mileage, older used vehicles available to sell.

The most accessible used cars carry prices between $15,000 and $30,000.

Automakers Build More Expensive Cars

If you haven’t been car shopping in a while, the cars on offer may surprise you.

In recent years, inexpensive cars have grown scarce. A recent analysis finds that sales of vehicles priced at $25,000 or less have fallen by 78% in just five years. Six years ago, automakers offered 36 new models in that price range. By late 2023, that number was just 10. Automakers have announced plans to cancel most of those 10.

Meanwhile, those priced at $60,000 or higher have grown by 163% during the same period.

Jonathan Smoke, Cox Automotive’s chief economist, explains that last year’s Federal Reserve interest rate hikes kept some shoppers from buying cars: “This trend induces automakers to focus on profitable products for consumers who can afford to buy, which keeps less affluent consumers out of the new vehicle market altogether and limits what is available and possible in the used market for years to come.”

Dealers are pushing back, telling automakers they need more mainstream cars to sell, but correcting the problem will take time.

How to Buy a Car Right Now

New car prices remain more than $9,000 higher than five years ago, before the COVID-19 pandemic. That’s when the average transaction price for new vehicles was around $38,162. However, with all the technological advances and offerings, your next car will likely last longer and help you drive safer than ever. 

RELATED: Buying Older, Used Cars in 2025

Vehicle quality studies repeatedly show that today’s new cars suffer fewer problems than those from just a few years earlier. Buyers of higher-priced used cars will likely see the vehicle driving on the road even longer. The same goes for those buying new ones.

With most automakers now building such durable cars, they compete by adding more high-tech features. Features like adaptive cruise control and Apple CarPlay are now more common than ever on entry-level vehicles. Read on to see our tips on buying a car below.

How to Leverage Incentives to Buy a New Car

Last month, car incentives comprised about 7% of the average deal, or about $3,300. To learn how to take advantage of incentives, read about our monthly best car deals to find dealer or manufacturer offers, including cash back and lower interest rates for financing your next vehicle.

RELATED: How to Buy a New Car in 10 Steps

Selling a Car Right Now

Few of us can sell a car without needing to buy a replacement. If you can sell now, what are you waiting for? You could get more for your vehicle if it’s in high demand, and that’s excellent news. The best way to get the most money for your used car is to sell it privately. But if you don’t want the hassle, there is still an opportunity to sell to a dealership.

PRO TIP: If selling a car, consider selling it peer-to-peer using Kelley Blue Book’s Private Seller Exchange marketplace. It’s a low-cost method that helps consumers earn more for their vehicle than selling to a dealership.

Trading in a Car Now

The ongoing shortage of used cars will be with us for years. As a result, you’ll likely still see respectable offers for your used car this month.

Searching for a decent price for your trade-in is still a good idea by shopping it around. Each dealership tries to keep a balance of vehicles on its lot. Sometimes, the one you want to buy from doesn’t need your trade-in desperately, but a competitor does.

Research your vehicle’s Kelley Blue Book value, then call several local dealerships to see what they’ll offer you for it. Or try our Instant Cash Offer tool, which brings the deal to you from various dealerships without obligation. You can choose your preferred offer or use it to negotiate with others.

Is Trading in Your Vehicle a Good Idea?

Possibly. You could get more money than usual if your vehicle is in high demand. It will help defray the costs of buying a new or used car. However, if your vehicle is not in high demand, you can expect to get close to Kelley Blue Book value. Use Kelley Blue Book’s car valuation tool to find out the price of your new or used car.

Can You Trade in a Vehicle That’s Not Paid Off?

Yes. Whether you have paid your car off or not, you can still trade it in. However, a car depreciates when you drive it out of the dealership. It’s best to take stock of how much equity you carry in the vehicle. Take the difference between the car’s current market value and what you owe to figure that out. Read our story on selling a car.

Looking Ahead

This year is likely to be one of major disruptions to the car market. Tariffs will likely raise the prices of new vehicles and indirectly impact used cars. Automakers and dealers will need to shift their practices to compensate. We could even see some cars canceled altogether if automakers find importing them at reasonable prices impossible.

That doesn’t necessarily mean you should rush out and buy while you can. Still, if you need a new car soon, it might make sense to act now while prices remain steady.

RELATED: 10 Best Used Car Deals

Tips for Buying a Vehicle Right Now

If you shop right now, we recommend a few strategies to help you find the right new or used car that fits your budget.

1. Expand your search. Widen your search to a broader geographic area because you could find a better deal or the used car you want outside your immediate area.
2. Stay patient. Call dealerships to see what’s in stock for those high-demand vehicles. Leave a refundable deposit if you want first dibs.
3. Buy a less expensive model. With higher car loan interest rates, consider buying a cheaper vehicle model instead of a more expensive one in the lineup you’re considering. Understand how much you can afford.
4. Look for deals. Make sure to research car deals to find what works best for you. It may involve contacting or visiting several dealerships as you search for the right fit.
5. Weigh your options. Don’t just look for a car; search for the best interest rates from banks or credit unions. Also, shop for your insurance rates ahead of the deal to know how much the higher auto insurance costs will cost for your desired vehicle. Then, weigh all your options, including financing incentives and deals at the dealership, if that’s where you buy your next vehicle. Also, you may find the price differences of some newer model used vehicles are almost the same as new cars. Just keep all your options open during your search.
6. Avoid dealer markups. If you see a markup (sometimes called a “market adjustment”) on your final invoice, ask the dealer to remove it. If they refuse, shop at another dealership. Markups were more prevalent during the COVID-19 pandemic. However, dealers still mark up some vehicles that are in short supply.
7. Question all add-ons. If your sales summary includes entries like “window tint” or “fabric protection” and other add-ons you didn’t request, ask the dealer to remove those line items from your invoice. Many dealers tack on these extras to make quick profits.

It may make sense to keep your existing car for another year. If you must buy, be prepared to take excellent care of your next car to keep it running for a long time.

Editor’s Note: This article has been updated since it was published.