How to Determine the Value of your Used Car
Easy-to-follow steps to help you assess the value of your pre-owned car
Step 1: Start with a used car price guideWhen it comes to determining the value of your pre-owned car, start by utilizing information published in leading used car price guides. You can find these guides, such as Kelley Blue Book, on the Web and in print editions.
Step 2: Know the difference between used car valuesWhile used car pricing guides publish different types of values, there are three common kinds. They are:
- Trade-in Value
- Private Party Value
- Retail Value
Trade-in valueIs the price you can expect to receive from a dealer when you trade-in your car towards the purchase of a new one.
Private party valueIs the price you can expect to pay when buying a used car from a private seller, or when selling a used car to a private party.
Retail valueIs the price you can expect to pay when buying a used car from a dealer. Retail value could also be considered the starting point from which to negotiate a lower price.
Step 3: Know the factors that impact used car pricesBefore you begin your research, it's important to know the seven factors that play a key role in determining what your used car is worth. They are:
These four pieces of information are the fundamental foundation upon which a final used car price is assessed. What is the trim level?
Once you've taken into consideration the make, model, year and trim level of your car, it's time to factor in mileage. Based on algorithms utilized by today's used car price guides, excessive mileage can significantly decrease a car's resale value. Additionally, driving more than the average yearly limit can cause disproportionate wear and tear on a car, negatively impacting its condition, and its price, in the process.
Condition also impacts resale value, that's why many used car price guides offer condition guidelines when it comes to assessing a car's fair market value. Condition guidelines usually range from poor to excellent, with different conditions in between and with varying criteria for each condition description. A car that looks new, one in exceptional running condition and one that needs no reconditioning would be considered in excellent condition, while a car with severe mechanical or cosmetic defects, in deficient running condition and one that has sustained irreparable damage would be considered in poor condition.
When it comes to equipment a vehicle that comes with a variety of features and functions usually nets a higher resale value than a scaled down, base model version. However, it's difficult to pinpoint exactly how much more a prospective buyer will pay and in certain situations, optional equipment can actually reduce your car's value by decreasing the number of prospective buyers who would be interested in purchasing it. The good news is that used car price guides do the heavy lifting for you when it comes to determining the value of your car and its equipment, taking into consideration — within their used car pricing algorithms — the basics, such as your car's transmission type and whether or not it has air conditioning, power steering, premium sound, power steering, airbags and more.
Step 4: Use your value as a guideOnce you've determined the value of your used car based on its make, model, year, trim, mileage, condition and equipment, be sure to use the value you've assessed as a guide. Keep in mind that other factors, such as supply & demand, market conditions — even location and climate — can all impact used car values, either positively or negatively. By following these steps, however, you're well on your way to arriving at a targeted, fair market value for your car at trade-in or resale time. Are we going to have a calculator on the site to point them to?
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