This is not the easiest question to answer because, like most things, a car is only worth what someone else will pay for it. But what determines how much that mystery buyer will be willing to pay? Over the course of this article, you will learn how to ballpark the value of your car and know what offers are fair and which are scams.
There are number of ways to determine value. The first is using your eyes and intuition. Then, second is utilizing the Kelly Blue Book. Next, you can do some market research to see what similar cars are going for. In this section, I list several tools to help you with the task. Finally, I provide some tips in collecting real-world offers on your car and assessing which offers are good and which are not.
What makes cars worth anything?
For people who do not understand why cars can be worth as much as they are, valuation can be mystifying. Why is that certain car worth so much more than a slightly different one? Why is mine worth so much less?
As in other commodities, cars and car prices are determined by supply and demand. So, the fundamental thing informing the price of a car is the number of the same car being sold vs. the number of people in the market for such a car.
What determines the number of people in the market is the real kicker here. What makes people want to buy a car? The first thing is the price. Cars that are priced well, sell well. This is a little bit of an oxymoron. After all, price depends on supply and demand, yet demand also depends on price. In this case, this is an economic mystery to hold in tension in your mind.
A “special” car is worth more
When you are considering a valuable car, typically there is something about that car which sets it apart. In your case, it may be the fact that you have taken such great care of your twenty-year-old jalopy that it is in better condition than any of its brothers on the market. If so, you can raise the price of your car.
A defective car is worth less
On the other hand, if you have a 2015 Ford without a transmission, you cannot charge anything near market value for your vehicle. There would be so many competing sellers and yours currently has such a defect.
Collectible cars have more value
Finally, certain cars just have collectible value. For the purposes of our discussion, there is no need to cover collectible cars and what determines their value. That is an entirely different market than the used car market.
The things that you must bear in mind when considering value are supply and demand. That is, the number of similar cars on the market, the condition of yours, and how many people want the car in the condition that yours is in.
All of this may seem like a lot. If you bear these overarching concerns in the back of your mind during the negotiation process, you will have a different mindset and come out the other end with better offers.
The first step, like in any appraisal process, is to gather all of the information you have right now. The important aspects to note about your car:
- Make and model
- Accident history
- Owner history
- Maintenance history
- Typical depreciation
1. Make and model
This is perhaps one of the most fundamental parts of your car. It can determine just how much value there is in it. Certain cars maintain their value much longer than others. Depending on the make and model, you may have one of the cars that depreciates at a much slower rate. These cars, therefore, can even become more desirable years after initial purchase.
For now, just determine the make and model of your car. The desirability of each make and model is something that requires more research and information than we currently have.
Moreover, make sure that you are familiar with what version your car is as well. For example, I have a Saturn Aura in my garage. It is a Saturn Aura but it is also a Saturn Aura XE. This means that it is not the deluxe XR version, meaning mine could be valued less.
In some instances, you may not know this information off the top of your head. Consider consulting your owner’s manual as this is an essential building block in discerning the value of your car. You should look for the make and model of your car and keep this in a note somewhere going forward.
One of the most important things to note about your car is the year. For some cars, the year is nearly as important as the model. Take the 2016 and 2017 Chevy Cruze as examples. They are probably worth less than an older model due to the number of recalls on the newer production lines.
You should think about the year of your car in terms of recalls. Does your car have a lot of recalls on it? Have you done those repairs?
If you have done all the recall repairs, you can basically consider your car good to go. But, if those recalls are still outstanding, bear them in mind when considering the selling price of your car.
Of course, if your car is old you should always have that in the back of your mind. Old cars come with a lot of disadvantages. As technology progresses, cars gain more and more features. Therefore, older cars pretty much always have fewer features to offer the buyer.
For some buyers, this may be an advantage because the car is often simpler and more parts are available. For other buyers, the older car means more age and more problems. You simply have to know your buyer and what he is looking for.
3. Accident history
How many accidents has your car been in? This question is highly important when selling your car and determining its possible value. Are you constantly in accidents or having trouble with your car? If so, chances are that your car has hidden issues that you have not gotten to fixing yet.
The simple truth about cars is that the more problems there are on the surface, the more problems there are brewing that you do not see. Furthermore, a car that is constantly rebuilt and reconstructed because of various bumps and bangs is probably less reliable than the same car coming fresh off the line. Would you buy something from an owner who mistreated that thing? The simple answer is no and neither would anyone else.
So, why would anyone buy a car that has a long accident history? The simple answer is, they likely would not. So, if your car has a history of many accidents you may have luck just donating the car or significantly lowering your price expectations.
Accidents always leave a number on the core of the car. Even though you may take your car for repairs and things may look better, that accident will leave its mark. Hence, this affects its value.
4. Owner history
Most people prefer a vehicle with only one prior owner. Why? This ensures that the buyer can get the entire vehicle history without many question marks.
Does your car have several previous owners? It may be good to consider this in your valuation. Remember, that as you sell a car with a few previous owners, you are selling a mystery package. What did the owner you purchased the car from hide from you?
If you are the original owner of the car, you know the entire history of the car. You have been entirely responsible for the maintenance. Therefore, you can make authoritative statements about the vehicle’s past. You can tell the new owner the full story of the vehicle.
5. Maintenance History
Piggy-backing off the previous statement regarding the vehicle’s history, make sure that you keep up on the maintenance of a vehicle to preserve as much value as possible.
Consistent oil changes mean that the engine can perform at top efficiency. Keeping tire pressure and rotations up will allow the tires to outlive their predicted lifespan. As you attempt to sell a car, consider all elements of the vehicle and how they have been maintained.
Another thing, when considering maintenance, is to consider the number of miles you have on your car. How have you taken care of it in relation to that mileage number? Do you use fuel injection system cleaner? Do you do the little things to keep your car in tip-top shape?
If car maintenance comes naturally to you and you are always on top of the “little things”, take these into account in the valuation of your car. With this and all the previously discussed topics, we can begin to arrive at a relative ballpark.
What work have you done on the vehicle?
These are all things that may add value to your car, should the right buyer come along. Like a house, cars can accrue value based on improvements made. Unfortunately, these improvements are often very costly.
If you have done any aftermarket enhancements, consider the original purchase price of those enhancements and factor that into the equation when calculating value. What price should you place on such enhancements? That really depends on the car and how well you have kept the whole package in shape. If you have a pristine car with a new speaker system, that speaker system may add considerable value. If, on the other hand, you have a junker with a killer sound system, your buyer may be uninterested.
Some basic improvements you could make to your car before the sale are:
- Throw some new brake pads and rotors on there. This small investment will probably improve the braking performance of the car. It may help you if your buyer inspects the car before making a purchase.
- Think about purchasing new tires. New tires can drastically reduce road noise while driving and can improve handling and braking distance.
- Check belts and fans. Make sure that belts and fans in the vehicle are in good, working order. Doing so can stop or get rid of noises that may cause concern to buyers.
- Replace windshield wiper blades. This will improve the wiper performance and possibly add some value to the vehicle.
Keeping up on some of the small things can provide a sense that the car has been well taken care of. This can help give you some leverage.
6. Basic Depreciation of Cars
The idea is, that when your car is a decade old it is worth about 10% of the original sticker price. This is a tremendous rate of depreciation and it is something to consider when selling a car of any age. As soon as your new car leaves the lot, most folks will tell you it has lost at least half of its value.
If you purchase a used car, that number is 20% off an already depreciated value. It is important to note that cars are, typically, not investments – they are goods to be used and disposed of. For this reason, you will never break even on a used car sale. That is unless your car is a classic collectible or something really special.
Kelly Blue Book
The Kelly Blue Book value of a car is considered the gold-standard car value. What was discussed above will get you in the ballpark of the market price. Kelly Blue Book, meanwhile, attempts to offer an exact car price based on condition, make and model, and age.
The Kelly Blue Book has some serious disadvantages though. As in other automated tools and calculators, Kelly Blue Book takes your own determination of the value of the car out of the equation. Instead, it asks you to fill out a few questions regarding the vehicle and will spit a number back at you.
Oftentimes, this number can be significantly different from what you were imagining in your head. KBB has a serious disadvantage in that it is mostly a “generalization”. That is, KBB is making broad statements about specific cars which can rarely accurately reflect their true value.
KBB, of course, has the massive advantage in that it requires little thought from you and is an industry standard. Are you looking to do only a minimal amount of considering and thinking? Getting and using the KBB value in your sale could be the way to go.
On the contrary, you can evaluate the vehicle value on a relative basis while also taking into account the KBB value. If so, you’ll get quite an accurate picture of the value of your car. You can then aim for the prices that would improve the chances of getting a sale.
To get the KBB value, simply go to any one of many online calculators and follow the prompts.
Ballparks using KBB
You can use the Kelly Blue Book value as the top-figure of your sell range. Often, KBB takes a very optimistic view that your car will be in great shape. Unfortunately, most individuals selling cars themselves have been driving their cars for a while. Thus, it would be difficult to show such a vehicle in great condition.
Use the KBB value to determine what you could get in a perfect world. Then, take into account all of the previously discussed factors and adjust your number down accordingly. Remember that as the number goes lower and lower, the car was never an investment. It was a tool to get you from place to place.
To provide the buyer an accurate picture of the car’s history, make sure you get a CarFax from www.carfax.com. Sure, you may be the only owner of the car and you may have taken exquisite care of the vehicle. However, a CarFax will provide you with the definitive paperwork to back up the statements you make.
Furthermore, any buyer worth their salt will ask you for this before making the purchase. If you have it in advance, that is a little less work for you.
Getting Real-World Valuations
The next step in the valuation process is perhaps the most intensive but the most precise. It is to begin to collect real-world valuations of the car.
We’ve been online doing research on our car and collecting information to back our price up. Now we should go online and begin looking at the selling prices of similar vehicles. A quick search on most used car dealership webpages should provide all the pricing information you need.
As you search online, see if you can find the same year, make, model, and similar ownership and accident history. You want to determine what the market price is for your exact car. This is not an easy task, but it will expand your knowledge of the used car market. This can prove crucial in valuing your used car.
Get an Inspection
If you have a trusted mechanic, get them to examine the vehicle. Depending on the mechanic, they may even be willing to throw a ballpark value of the car your direction.
An inspection done by a reputable mechanic will do many wonders for you:
- They can make sure that everything looks good on the car.
- They can warn you about any potential issues before the buyer sees them.
- They probably know more about cars and the car market than you do.
- They may be able to state what they think the car is worth, depending on your relationship with them.
A (trustworthy) mechanic’s opinion, will never be a bad thing to have when selling and buying used cars. So, get one!
Begin Getting Offers
The next thing you should do is pushing that sale and taking and entertaining offers. At this point, you should have enough knowledge about your car that you know what the general range of a good offer will be.
Are you receiving a bunch of offers below your range? Consider revising your expectations and changing your ideas of what the car is worth. You may have the car priced above where the market will support. Unfortunately, like houses, cars are part of a market that can be extremely fickle.
Are you getting offers above your range? Awesome!
Sell the Car As-is
You want to make sure that you indicate to the buyer that this sale is “as-is.” This just means that there are no additions to be made to the sale in any way.
Selling the car as-is will take most of the possible liability off your shoulders should the buyer say something’s wrong with the vehicle after the deal is done.
Simply put, the car valuation process is made up of a lot of research, plus a few educated guesses. Furthermore, your negotiation skills will be tested in this process. Make sure you maintain a kind demeanor for all offers. You never know what you missed and what the market will support in terms of car pricing.