(November 29, 2010) SANTA MONICA, Calif. — Consumers driving three-year-old cars have the opportunity to get a lower monthly car payment by buying a new car, thanks to a downward trend in interest rates and an increase in used car values.

According to the analysts at Edmunds.com trade-in values for three-year-old cars were up 10.3 percent in October 2010 compared to October 2007, while interest rates on 60-month auto loans have declined from an average of 7.4 percent in October 2007 to 4.7 percent in October 2010.

Edmunds.com Analyst Ivan Drury pointed out, "By taking advantage of these unusual market conditions, consumers who purchased cars three years ago may be able to get top dollar for their trade-in, lower their monthly payments and get a new car — all at the same time."

A consumer who has a five-year $25,000 car loan at the average interest rate in October 2007 will spend $4,985 in interest while the current average rate would generate an interest charge of just $3,101. This reduces the monthly payment from $499.76 to $468.35.

A consumer who qualifies for cut-rate financing would save even more. At the 1.9 percent interest rate that is being widely offered by automakers today, a qualified buyer with a $25,000 car loan will spend just $1,226 in interest, bringing the monthly payment to $437.10 per month.

"It is a terrific time to sell a used car since they are in high demand right now," noted Edmunds.com Analyst Joe Spina. "That is especially true for cars that are three years old and newer since they often qualify for automakers' certified pre-owned vehicle programs, making them quite valuable to dealers who can sell them for a premium after certifying them."

Many new cars are actually less expensive than some one-year-old used cars.

The following three-year old vehicles are among those that lead their segments in average True Market Value price increases since October of last year

The chart below lists year-over-year used car price increases by vehicle segment.