Used car prices have been falling for a couple years, and that trend should continue in 2018, making it a good time to find deals on cars. The main reason: a flood of off-lease vehicles coming to market. Last year, about 3.5 million late-model, off-lease vehicles found their way onto dealer lots. This year, that number will rise to 4 million.

Why the flood? The car industry went lease crazy over the past few years, accommodating car buyers who were finally coming back to the market after licking their financial wounds from the Great Recession that struck in 2008. All those leased cars helped propel growth in U.S. car sales for seven years, peaking at 17.5 million sold in 2016.

Speaking of floods – you don’t want to jump on a used car deal just yet. Hurricanes Harvey and Irma swamped up to 1 million vehicles beyond repair, and demand to replace those has temporarily shored up used car prices. Those prices actually ticked up in October and November. Prices should resume dropping – but probably not until February, and deals should improve through the spring.

For an idea of how much prices have dropped already, consider the average used car lost 17 percent in value from August 2016 to August 2017, according to auto analytics company Black Book. That translates to a drop from $18,400 to $15,300.

Not only will the surplus of off-lease autos bring down used-car prices even more, it should also act to hold down new-car prices. Discounts will be particularly steep in sedans.

When you find the vehicle you’re looking for at a great price, don’t blow your savings with a high interest rate loan. Too often we fixate on the monthly payment and don’t shop for a good rate. Be armed with the lowest rate your bank or credit union can provide before stepping onto the car lot.

Car dealers are also scaling back on leasing. So, you may find that unlike a couple years ago when leasing was king, you could get a better deal next year from buying.

The Price of Popularity

The one exception, unfortunately, will be pickups and bigger SUVs. The demand for those remains so high that prices should continue increasing, analysts say. Navy Federal members’ car buying habits reflect the population as a whole, which means we love trucks as much or more than the rest of America. Five of the top 10 identified favorite cars are trucks. These three top the list:

  • Ford F-Series
  • Dodge Ram
  • Chevy Silverado

But popularity comes at a price.  According to auto research firm J.D. Power, in 2012 you’d pay an average of $32,444 for a new Toyota Tundra or Ford F-150. By the end of 2016, that jumped 20 percent to $39,125.

But we also like Honda Civics and Accords, and Toyota Camrys, which are in our top 10. We should see used-car deals among those in 2018.

What Car Do You Need?

If you love trucks, I get it. I know about wanting to own a vehicle that suits you just right. My first car was an “econobox” – one of those small, fuel-efficient, no-frills cars. It was all I could afford at the time, and I kept it alive with Bondo® and elbow grease until I could save enough for a car I really wanted. That one was cherry red, had four-on-the-floor transmission and sucked way too much gas.

When my wife and I raised our girls, we dutifully owned a couple minivans – but we couldn’t wait to trade in our last minivan for a new SUV. I also drove my first F-150 not too long ago, and I pretty much liked everything about it.

I’ve talked to Navy Federal branch personnel about a top problem they’ve seen with car buying: Younger members buying too much vehicle, like a truck, for their budget. A crushing car payment not only crimps a lifestyle, but can hurt your credit if you miss payments or default on the loan.

Emer Quiazon, a Navy Federal Certified Financial Counselor at our Kempsville branch in Virginia Beach, Virginia, talked to me about how he helps members avoid such problems. He said when an auto purchase is viewed in a financial vacuum, the lure of a shiny new truck can make a $600 monthly auto loan seem completely reasonable.

“But when I go over their budget and ask what other financial obligations they have, and what they’d do with an extra $200 or $300 a month, it gives them a new perspective,” he said. “To have the lifestyle you want, I’ll point out, you may have to go in a different direction with a cheaper truck or car.”

Still, he admitted, sometimes the emotions surrounding a good truck win out, even if the payment will be a budget buster.