Used Car Dealers NAICS 441120

May 27, 2025 - Hidden Fees on Used Cars is A Common Practice

• Every year used car dealers add about $11.8 billion in hidden fees on 26 million used automobiles sold, according to a study of sales transactions by used car app CarPilot. The fees are more common than most car buyers know, with CarPilot finding 71% of used car shoppers encounter the hidden fees on US auto brands versus 64% on foreign autos. Some fees are legitimate, while others CarPilot ranks as either illegitimate (such as wheel etching, wheel locks, warranties, exterior paint protection, etc.) or excessive (licensing, e-filing fees, and title and related documentation fees). Customers can avoid being blindsided by fees if they contact the dealer beforehand and settle on a pre-arranged price or research the average fees in the states they live in. Some states including California and New York require clear and itemized disclosure of added fees, a practice that isn’t uniform nationwide.
• Used car auction prices jumped to their highest level of the year in 2025, according to Cox Automotive’s Manheim Used Vehicle Index, with consumers rushing to buy used vehicles ahead of coming auto tariffs. The index rose 4.9% in April year over year, which is the highest it has been since October 2023. From the previous month (March 2025), the index increased 2.7%, a significant climb from the typical month to month increase of 0.2%. Cox Automotive noted that the industry’s usual “spring bounce” in wholesale prices falls off by the end of April, but this year price appreciation has continued throughout the month. While tariffs directly affect new car prices, they indirectly also increase used car prices as consumers turn to used vehicles as an alternative and reduce available inventory.

• Prices for one to five-year-old used cars increased 1% year over year in March 2025 because of tariffs, the first time prices have increased in two years, according to a study from research site iSellCars. The average price increase for a used vehicle was $317 in March, compared to a price decrease in February of $238. With automakers raising prices on new cars (or rethinking its production strategy altogether), consumers will turn to used cars to compensate, but the ripple effect of fewer new cars will also drive used car prices higher since it eventually stifles inventory of more recent used car models. The glut of older inventory forced prices down because of low demand (which dealers will be happy to sell) assuming they can cut good deals if used car prices continue to rise with tariffs making those vehicles the primary available auto inventory for sale in the US.
• Used car dealers face growing headwinds as Q1 2025 draws to a close, with the industry still struggling from issues of dwindling vehicle supply and high interest rates on car loans. The supply scarcity comes from the lingering pandemic-induced shortage of new car production, which ripples down to the used market with less older cars being traded in. Three-year-old vehicles (usually lease trade-ins) are the sweet spot for used car sellers and buyers - they are still relatively new and usually have a couple warranty years left. But prices on those vehicles rose 3.3% year over year in Q4 2024 per comparison car shopping site Edmunds. Stubbornly high interest rates are also depressing used car sales, making them feel almost as expensive as a new car for many consumers. Used car loans average from about 8 to 10%, almost double what it was five years ago, according to Auto Spies.