Used Car Values, and How to Resell High
Used car values are highly competitive. Cars are an expensive asset, usually the second biggest purchase for anybody right behind a house. Most consumers take a huge loss on their used cars when they go to sell. The best way to get a fair chunk on a private or even a dealership sale of your used car is to first know how used cars are valued. Knowing what to look for before even purchasing your car will certainly be a big help to you on the back end when selling five or ten years down the road. Automotive industry standards such as Kelly Blue Book and Edmunds have certain criteria they follow and look to when determining the price or value of a used car. Knowing what these factors are, which ones are the most important, and how to curb them to your favor, will create an opportunity to turn that big financial loss of a depreciated vehicle, into a manageable fiscally responsible opportunity.
Wikipedia defines depreciation as, “The decrease in [the] value of assets.”
The biggest depreciation in a vehicle’s lifetime initially occurs after it is bought by the original owner and continues within the first five years of ownership. It seems odd to think about, but depreciation is the biggest expense of owning a new car, other than the original price paid. Simply owning and driving a new vehicle costs more money to the consumer than owning a used car because the value of a new car drops faster than the value of a used one. A used car has most likely already incurred its biggest “loss” in value before you even looked at it.
How Used Car Prices Differ?
Many different factors contribute to a used car’s price or resale value. Keep in mind that a car’s value is also different depending on who is valuing the car. A wholesale price or trade-in value will be on the lower end of a used car’s price. This is the price a dealership will expect to give a consumer for a trade-in or a dealership-to-dealership sale. Generally, the wholesale price will be a little higher than the auction price of a used car, which is usually only open to certified car dealers who get a chance to bid on several used cars at once. Also, there is the retail price, the highest price value of a used car, which can be found on the stickers of windshields, in the lots of dealerships. If you see a used car that you previously traded in on a lot with a higher sticker price than you received in trade, that’s the dealer trying to make a profit on the car.
What Factors Are the Most Important?
There are major factors that determine a used car’s price or value. One of the most important is the car brand’s reputation. If a car brand has a great reputation with consumers, you can bet that carries over to a used car’s value as well. People love a good brand, and if it is a good brand, it won’t matter that it’s used.
Mileage. A car’s odometer reading generally directly relates to a used car’s value. A higher odometer reading usually means more use, longer travels, and a higher wear and tear on the vehicle from the motor to trunk. Lower mileage used cars get sold quicker and for an overall higher price.
Economy. Fuel prices are rising and falling all the time. It does seem that every time they rise, however, they don’t fall back as much, do they? The better fuel economy a used car has, the higher the resale value.
Supply and Demand. If a used car has a thousand other “sister” models around in the area that you are trying to sell it, chances are, you’ll have to price lower. If there are a thousand of the same car around, the demand for it will decrease.
To Paint or Not to Paint. You may not think that the paint on the outside of your car could add or detract from the overall price, but it can. A smooth neutral color paint job will add financial value as well as intrinsic value and style. Wacky colors like neon orange and lime green can really hurt your car’s price.
How Can I Keep My Car’s Value as High as Possible?
It is possible to help your used car keep some of its value. First off, be tidy. Keeping both the interior and exterior of your car clean helps keep the value intact tremendously. Nobody wants a car that smells like cigarettes and has holes in the seats. Not even smokers.
Keep those records. Having your car serviced and properly maintained, with records, is a great way to keep up its value. A car that was well taken care of, with the records to prove it, will sell for a higher price than a car with no service records.
Garage, please. You wouldn’t sleep outside in the rain, snow, or beating sun would you? Why should your car? The elements have a huge impact on your car’s exterior. Parking in a garage every night extends the life of your car’s paint job, and that’s not even the best part – no scraping off ice or snow!
Be proactive about it. The next time you are in the market for a vehicle, try to keep some of these targets in mind. Safety, fuel economy, brand reputation, and color are all things you can control when making your next “investment” in a new or used car. These factors greatly influence the overall resale value of a used car. Things like color, interior, body style, and additional options have a pretty high impact on a vehicle’s value as well. Knowing what to look for and what not to when searching for a vehicle can save you a lot of money down the road. Ultimately, you can have an influence on the value of your used car.