(iSeeCars) – Inventory constraints due to the microchip shortage have driven used car prices to record highs. That means your own used car, which is typically a depreciating asset, could be worth more than, or close to, what you originally paid for it. Or, at the very least, it’s worth considerably more than it would be in a stable used car market.
If you’re thinking of selling your car or trading it in for a new one, it’s important to know the value of your vehicle. This guide will give you all the information you need to price your vehicle, either for a sale or to help you get a fair price as part of the trade-in process.
What’s My Car Worth? How to Calculate the Market Value of Your Car
A car’s market value is the amount you would receive for your car if you were to sell it to a private buyer. How do you determine this value? There are helpful online tools like the iSeeCars Price My Car Tool, which provide a detailed pricing report to help calculate your used car’s value. Simply enter your vehicle’s VIN or provide its make, model, year, trim, style, and mileage.
The Price My Car tool will then provide a used car valuation with a suggested range of prices to list it at, depending on how quickly you’re looking to sell.
How Do I Find My Car’s VIN?
Your vehicle’s VIN (vehicle identification number) is most commonly located on the dashboard on the driver’s side of the car, but can also be found inside the door jamb on the driver’s side door. You can learn more about what your car’s VIN can tell you with the iSeeCars free VIN check tool.
Understand What Your Car’s Valuation Really Means
Your vehicle’s market price is calculated by analyzing the prices of similar cars for sale in the same local market. The calculation takes into account many considerations, including price, mileage, vehicle condition, trim level, and features. The pricing information also factors in outside market conditions like supply and demand.
There are a few different values for your vehicle, and it’s important to understand the differences among them. Here are some additional terms you’re likely to hear if you’re selling or buying a vehicle:
Understanding Car Values: Market Value Vs. Car Trade-In Value Vs. Retail Value
Market value is different from trade-in value, although the two terms are often used interchangeably. A car’s trade-in value is the amount of money a car dealer will offer you for your vehicle, whereas market value, also referred to as private party value, is the amount of money you would get selling your car directly to a buyer. Because dealerships handle the complex process of selling the vehicle, they offer a lower trade-in value to ensure they make a profit when they sell the car.
Keep in mind, dealers have to cover the overhead costs associated with the transaction, like inspecting, reconditioning and transferring ownership. Another pricing term is retail value, which is what a buyer can expect to pay for a used car at a dealership versus buying from a private individual. The retail value will likely be the highest figure, as it covers overhead and helps dealers make a profit.
Using Market Value to Sell Your Used Car
Once you have your car’s market value, you can price your car accordingly. If you want to sell your car quickly, you can price it below market value. If you aren’t in a rush to sell and want to leave room for negotiation, you can price your car closer to or above market value.
Many pricing tools like the iSeeCars Price My Car Tool will give you a range of prices to consider based on similar listings in your local market. If you want to sell your car quickly, you can choose the lowest or best price, while the highest price will give you the most money but will likely take longer to sell. The price in the middle is the closest to current market value, which means a price that is less than some similar listings but more than others.
Once you’ve determined your asking price, you can use the free iSeeCars Sell My Car Tool to list your vehicle.
Is It a Good Time to Sell Your Car?
Certain times of the year can be better than others when it comes to selling your car. For example, you can get more than $385 on average in April when selling SUVs and sedans, while May will get you the most money for selling your pickup truck. Generally, February through July is when you will get the most money for your vehicle. If you aren’t in a rush to sell your car, you can put your car on the market when it’s expected to bring you the greatest profit.
What If I Decide to Trade In My Car?
While selling your car privately will yield you a bigger profit than trading it in to a dealer, some car buyers find that it isn’t worth the added hassle. Trading your car to a dealership means that you don’t have to show your car to prospective buyers and go through the trouble of transferring your car title. It can also make your car transaction easier, as your trade-in value will go towards your new car payment. If you trade in your car, get a few quotes from multiple local and online dealers to see who will give you the best price. You can choose to sell your car to Carvana or Carmax, and they will provide you with an instant offer that is good for seven days. You can also use those prices to negotiate your trade-in value with the car dealer you’re purchasing from.
Using Market Value to Buy a Car
Market Value also plays a role in buying a car. By understanding a car’s market value, you’ll know if a car is priced fairly by a dealer or a private seller.
The Depreciation Factor
The average new car loses nearly half its value after five years. However, some cars hold their value better than others. Along with keeping your car’s condition as pristine as possible, buying a car that retains its value will help you command a higher car price when it comes time to sell or trade in your vehicle. Keep in mind that optional equipment and special packages typically don’t aid in resale value.
Trucks and truck-based SUVs retain their value better than average, while luxury vehicles depreciate more than average. Reliable vehicles, like Toyotas and Hondas, also tend to have high resale value because of their durability and lower-than-average maintenance costs. Understanding a car’s depreciation can help car shoppers make a smart car buying decision, especially if you plan on trading it in after a few years.
Additional Used Car Buying Resources
Here are some additional resources to determine if you are paying a fair price for your used car:
- Kelley Blue Book (KBB): KBB is a trusted resource to help you determine the price of your used car, so much so that “blue book value” has become synonymous with a used car’s value. The Kelley Blue Book Trade In Range shows a range of prices that consumers can expect to receive when trading it in at a dealership. The Kelley Blue Book Private Party Value provides a fair price for a used car from an individual seller. KBB also gives an Instant Cash Offer based on its trade-in value, which is valid for seven days. Consumers can take that offer and bring it to a participating dealer for cash or credit towards a new vehicle.
- NADAGuides: Designed for dealer members of the National Automobile Dealers Association (NADA), the NADA pricing guides use retail sales data to determine the sale prices for used vehicles. The main difference between the NADA and KBB is that KBB focuses on condition, mileage, demand, and features, while NADA looks at a car’s wholesale price.
- CarFax: CarFax provides the value of a used car based on its miles, condition, location, make and model, trim, and other factors. Carfax focuses on the individual vehicle and history rather than external factors such as market conditions and seasonality. You can enter your vehicle’s VIN or license plate number/
- TrueCar: Data aggregation company, TrueCar, has a network of dealers across the United States that provides the company with car sales data. TrueCar provides an estimated value based on questions about the vehicle’s specs and condition. It then provides you with a TrueCar cash offer and connects you with a certified dealer who will deliver a check for the vehicle’s value.
Getting an accurate price for your used vehicle can help you decide if you want to sell it. If you decide to sell your vehicle, you’ll have the information necessary to determine the right price for your car. You’ll also likely need to buy a replacement vehicle, and having the right tools to determine a car’s market value can help you determine if you’re getting a good deal.
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If you’re interested in a new or a used car to replace the vehicle you’re trading in or selling, be sure to check out iSeeCars’ award-winning car search engine. It uses advanced algorithms to help shoppers find the best car deals across all vehicle types and provides key insights and valuable resources, like the iSeeCars free VIN check report and Best Cars rankings. Filter by make, model, price, and special features to find the best deal on your next vehicle.
This article, How Much is My Car Worth?, originally appeared on iSeeCars.com.