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How to Determine the Value of Your Car

Millennial Magazine - value of your car

If you decide you want to sell your car for the highest price, the first thing to do is figure out the value. If you don’t know the value, it will be tough to negotiate to get the right price.

With that in mind, the following are some of the things you should know to determine the value of your car.

Explaining Car Values

When you’re selling your car, there are a few central terms you might hear as far as its value.

These include:

  • Retail value: This is the price a dealer sets for a used car when selling it. The retail value is pretty much always going to be higher than a car’s trade-in value because a dealership wants to make a profit when they resell a vehicle.
  • Trade-in value: This is how much a dealership will pay you for your car. The trade-in value can be used to reduce the cost of leasing or buying a new vehicle. As mentioned, the trade-in value is almost always going to be less than the retail value because the dealership is a middleman. They want to make a profit, so to do so, they need to mark up the price of the vehicle before they sell it. If you were to find a private buyer, you would typically be able to get more money, but some people sacrifice that for convenience, which they get when they sell to a dealership.
  • Residual value: This term refers to how much a car is worth at the end of a lease or a balloon loan term. Residual value is a percentage of a car’s initial price. Residual value can be used to determine monthly payments if you lease a vehicle.
  • Fair market value: This is a term you’ll hear used more often if someone is in an accident and is dealing with their insurance company. The fair market value is the amount of money it would sell for on the open market. The value is used sometimes to figure out what you might sell a vehicle for privately or to a company or what the insurance replacement value of the car is.
  • Private resale value: This is a term referring to how much you could if you directly sell your old car. It’s going to be a number similar to the fair market value.

The Information You Need to Estimate Vehicle Value

If you want to figure out how much your car is worth, you can often use an online estimator tool. The information you’re going to need to do so includes:

  • Make, model, and year: You’ll need to have this basic information and a lot of car valuation tools are also going to want to know the color, interior, and trim details of the car. Check your owner’s manual if you aren’t sure.
  • Features: There are certain types of features and equipment that can impact the value of your car. You should note any of these such as leather seats or a custom infotainment system.
  • Mileage: This is a big one in determining the value of your vehicle. The more miles you’ve driven the car, the less it’s going to be worth. You can find the current mileage on the odometer on your dashboard.
  • Condition: The condition of your car can include excellent or average. You don’t want to overestimate the condition of your car, which will skew its value and leave you disappointed when you try to sell it or trade it in.

Defining Excellent, Good, and Fair Condition

One tool that many people turn to determine the value of their vehicle is Kelley Blue Book.

Kelley Blue Book has been used since 1926. There are four condition classifications in the Kelley Blue Book for cars and boats, and motorcycles.

Most used cars will not fall into the excellent category. The large majority would be classified as good or fair.

  • Excellent: If a vehicle is in excellent condition, it will appear brand new, not requiring any repairs. The interior and engine are clean. The engine shouldn’t have any signs of wear and tear. A vehicle that’s in excellent condition will also have a clean title history and a provable service record. Kelley Blue Book says less than 5% of all used cars are categorized as being in excellent condition.
  • Good: A good condition vehicle will have a clean title and no major mechanical issues. If there are any issues mechanically, they should be easy to repair. If a car is in good condition, it doesn’t have major flaws like body damage. The interior and exterior are in good shape with few or no dings or defects. The car’s body shouldn’t have rust, and the interior should have minimal wear and tear.
  • Fair: A fair condition vehicle may have tires that need to be replaced, and there may be some rust. If there is rust, it should be repairable. Any imperfections or issues with a fair condition car should be repairable or serviceable.
  • Poor: Kelley Blue Book doesn’t provide any specifications on a poor quality vehicle because, according to the organization there is too much variance in the value of these vehicles.

Other Value Estimators

Along with Kelley Blue Book, you can go to Consumer Reports to start estimating the value of your vehicle. Consumer Reports is a credible source, and they have a site you can use to value your car.

Autotrader has a car valuation tool, but it’s based on the Kelley Blue Book Value.

Edmunds has its own free appraisal tool, and you can enter information like your VIN or license plate to get an accurate appraisal in as fast as a minute.

Once you have an appraisal, you’re empowered to make sure you get the most possible money for your vehicle. Every vehicle will depreciate over time, so by estimating the value of yours, you can figure out where you stand and the next steps you need to take.

What do you think?

Written by Brooke Chaplan

Brooke Chaplan is a freelance writer and blogger. She lives and works out of her home in Los Lunas, New Mexico. She loves the outdoors and spends most of her time hiking, biking, and gardening. For more information, contact Brooke via Facebook at facebook.com/brooke.chaplan or Twitter @BrookeChaplan

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