(CNN) – Good news for those wanting or needing to buy a used car: Prices are falling. But that’s not the case for new cars.
After years of low inventory and soaring prices, the cost of a used car fell nearly 2% in January, according to the Consumer Price Index.
Data from Edmunds shows the average price of a used car in December was down $1,600, costing consumers about $29,533.
If you’re looking to take advantage of the drop, experts said do your research first.
”Being mindful and also being conscious of the vehicle and trying to get an extensive history of that vehicle is probably most important when you are in the market,” said Kayla Reynolds of Cox Automotive.
Experts said higher interest rates are making it more expensive to finance a car purchase, which is limiting demand.
An increase in the supply of critical parts like computer chips is also pushing down prices.
President Joe Biden has pushed to expand chip manufacturing at home to prevent future shortages.
“We’re opening factories in your states to build semiconductor chips and electric vehicles and advanced batteries that’s going to power those vehicles,” he said.
When it comes to new cars, prices rose .2% in January and were up 5.8% year over year, the Consumer Price Index shows, and car insurance premiums are also climbing.
According to Bankrate’s annual true cost of auto insurance report, the average cost of full coverage insurance has reached $2,014 a year nationally. That figure is up nearly 14% from last year.
Bankrate said years of high inflation resulting from labor and parts shortages drove up the cost of insurance claims for car repairs.
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