Used Car Inventory Improves, but Sub $20,000 Vehicles Remain Scarce

Used vehicle inventory is gradually improving in 2025, but affordable options under $20,000 remain increasingly difficult to find. While the consumer price index shows used car prices were down 2% in January compared with a year earlier and 1.8% from December, overall prices remain significantly higher than they were five years ago.

According to J.D. Power, the average price of a used vehicle up to eight years old reached $30,202 in 2025, a 27.6% increase from $23,668 in 2020. At the same time, the share of vehicles priced under $20,000 has dropped sharply. In 2019, 53% of used vehicles fell below that price point. In 2025, that figure stands at 30%. Industry analysts report that while more vehicles are entering the market, many are higher-priced models, limiting how much relief buyers see at the lower end.

Wholesale prices ticked higher in January, further reducing the likelihood of significant price drops despite improving dealer inventory. Analysts expect a richer mix of vehicles entering the used market, reflecting years of consumer preference for SUVs and trucks. Sedans accounted for just 17% of the new car market last year, compared with more than 40% in 2015.

Financing remains a major factor for buyers. Edmunds reported the average amount financed for a used vehicle in January was $29,364, with an average interest rate of 10.5%. Financing that amount over roughly 70 months results in a monthly payment of about $551 and more than $10,000 in interest over the life of the loan. Buyers with lower credit scores face steeper costs, with average used loan rates reaching 19% for scores between 501 and 600, compared with 7.43% for top-tier borrowers.

A growing share of buyers are committing to monthly payments of $1,000 or more. In the final quarter of 2025, 6.3% of used car buyers reached that threshold, up from 5.4% one year earlier.

Industry analysts report that more off-lease vehicles and fleet units are expected to reach the market this year, which could increase selection. However, while availability is improving, pricing pressure remains a reality for many shoppers entering the market in 2025.

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