Used Car Prices up 8.5% Since Last Year

The average price paid in the U.S. for a used three-year-old vehicle was up nearly $1,500 - an 8.5% increase from a year ago.

This is good news for those selling or trading in, but not for buyers who will have to pay higher prices.

Tight supply is one factor driving up used car prices. Automakers are responding by emphasizing their certified pre-owned car (CPO) programs.

CPO cars sell for a higher price, typically $1,000 more, because they are pre-inspected and carry an extended factory warranty.

As the price of used cars has climbed, and incentives remain strong on new cars, in some cases new cars are cheaper to buy than their one-year-old counterparts.

Savvy shoppers who do their homework can walk away with great deals and still get that "new car" smell.