Before you sell or trade in your car, it's vital to know its current value. The good news is that a number of reputable websites give you quick access to this information. But before you start clicking through price estimates, it's important to understand the differences among the types of used car values and to find out what makes your car worth more or less. This will help you select the best price for your situation and get the most money for your car. Read on to learn more about used car values so you can price your used car right.
Understanding different types of used car values
Auto websites such as Edmunds.com, Kelley Blue Book, and CarGurus are fast, free resources for finding the value of your vehicle. Before you begin, you'll need a few details about your car or truck. Write down the exact model and trim level, and take a look at your current mileage. Do an objective inspection to determine the condition of your interior and your exterior, and assess how well your car is running. Enter in this information on one of the above websites, along with your zip code, to get your used car value. Here are the different types of values that may be listed:
Retail value: If you go to a car dealer, the retail value is the amount you can expect to pay for a model similar to yours. But don't confuse retail value with how much you can get for your car if you sell it yourself. Dealers have additional costs when selling vehicles – including the expense of preparing the car for sale – so it's expected that their used car prices will be higher.
Trade-in value: "Trade-in value is an estimation of what you can expect a dealer to offer you if you were to trade your car in to a dealer instead of trying to sell it yourself," explains Amy Mueller, director of public relations for CarGurus. Typically, this value is the lowest of all the price categories – use it to value your car only if you are trading it in. If you do plan to trade in your car, you should know that you can negotiate with your dealer to get a higher trade-in value, which could result in a better car deal overall. Before you head to the dealer, do your homework and look up your car's trade-in value.
Private party value: If you plan to sell your car on your own, you should price it near the private party value. If you are looking to buy a car from an individual, this is also the amount you can expect to pay.
Current market value: Some websites label their used car values as "current market values," such as CarGurus’ Instant Market Value. This means that instead of relying on traditional methods of value estimation, which was standard practice when car values were restricted to hardbound books, many companies now utilize databases that track the selling prices of cars across the country. This allows them to provide up-to-date price estimates based on the actual selling prices. Depending on the website, the current market value may only apply to the private party value, or it may apply to all three categories of used car values.
Why do websites quote different used car values?
If you look up a 2011 Ford F-150 on Edmunds.com, you'll get a trade-in estimate of $11,900. Search this same truck on CarGurus, and your truck is suddenly worth only $10,700. Why are these two sites quoting values that are $1,200 apart? As it turns out, each website has its own secret sauce when it comes to calculating car values. Part of the difference is because some pull data for cars that have actually sold, while other websites track vehicles that are currently for sale. The accuracy of the estimate also depends on how in-depth the price analysis is. For example, a company that tracks options such as leather seats, paint colors, and towing packages may be able to offer you a more precise price for your specific vehicle than a basic appraisal.
How do regional differences affect your used car value?
When websites ask for your zip code during your used car price evaluation, it isn't because the companies want to track where you live. Instead, the information is used to adjust the estimated value of your car based on your region. "Certainly there's an immense difference in the weather between [Massachusetts] and Southern California. That will have a dramatic impact on how a car ages," says CarGurus Editor Steve Halloran. In addition to weather, Mueller adds that there are all kinds of economic factors at play within a region that can impact your car's value, including differences in supply and demand between a state's urban and rural areas.
What else affects the value of your car?
If you own a model that has been labeled as one of the best used cars or SUVs to buy, your used car value will be higher than a similar model that isn't rated as high. The specifics of your vehicle can also impact your used car value. Having features that are popular – cruise control, a sunroof, leather seats –make your vehicle more desirable and may let you set a higher selling price. On the flip side, any issues with your car will bring down its value. Smelly interiors, a dented passenger door, or a rough-running engine will lower the worth of your car. Because most sites don’t have individual check boxes for specific problems, you'll need to consider your car's overall condition and match it to the description that is most accurate (excellent, very good, good, etc.).
Setting your sale price
Accurate pricing starts by selecting the type of used car value that matches what you want to do with your car. If you are selling the car yourself, for example, use a private party value only, not the retail price. It's important to keep in mind that the price ranges quoted online are only average values. Because they can't adjust to encompass all the specific details of your car, a little bit of savvy estimation may be needed to set your selling price.
To look at a real-world example, Edmunds.com says an average four-door 2012 Honda Civic has a private party value of $7,900. Kelley Blue Book estimates this car's value at $8,100. Common selling strategies include starting at the higher $8,100 asking price or advertising using an average of the two ($8,000). "Sellers will usually do best (in terms of getting eyes on their listing and reducing the time it takes to sell the car) if they price their cars competitively at close to or slightly below the Instant Market Value," advises Mueller. "Also note that pricing too far below the Instant Market Value can backfire, as it can lead consumers to question what might be wrong with the car and skip inquiring at all."
If you have a loan for your used car, and your used car value is less than the amount you still owe, it means you are upside-down. You can learn more about why your car loan is upside-down and how to get out of an upside-down car loan. Find out more about the best time to sell your used car, and be sure to follow us on Facebook and Twitter for more tips on selling your used car.