How Much Is My Car Worth?
How Much Is My Car Worth?
There are a few reasons why it is a good idea to know how much your car is worth, when you are selling your car, or when you need to make an insurance claim due to an accident. This can help you avoid getting ripped off in either situation, albeit one typically gives you more control than the other.
What Factors Go Into the Value of Your Car?
Every year 40 million used vehicles are sold. The companies that track these sales allow you to search what they sell for, the details of the car, and any other information you might need. These are valuable resources for anyone that is looking to see how much they can sell their car for. This provides a fair market for those willing to do research and walk into the dealership knowing how much to ask for their vehicle.
There are various sources to help you find the value of your used car, but there are different factors that will affect how much your car is worth. This can include superficial things such as the color, but also important qualities such as the condition.
One of the most important factors in determining your car's value is the make. For example, you know that a Ferrari is not the same as a Honda, and each has its respective values. Now, this is an extreme example, but the same can be said between a Jeep and a Honda, or an Audi and a Toyota. Some cars are simply made to be luxurious while others are made to be economical.
The second most important factor in determining car value is the model. Although two cars may be of the same make, they can be completely different in value. Therefore knowing the difference in value between two models of the same make is very important. For example, BMW produces a range of luxurious cars. If you purchase and then sell a 3-series, the purchase and resale value may be around $20,000 to $30,000. If you purchase and sell a BMW i-8 it might be anywhere between $147,500 to $80,000.
Another important part of a car is the submodel. The submodel can be as small as adding an “S” or “R” to the name, but it makes a huge difference in the capabilities and resale value. In some cases, such as with valuable or collectible cars, this can become even more important and add huge amounts of value.
Trim is usually most important when it comes to newer cars. Trim level matters a lot less with used cars because the mileage and condition matter a lot more. Despite this, it is still a factor in determining the value of your used car.
Although not the same as body style, trim options are an added choice for new car owners. Trim levels relate to the equipment and the styling on each vehicle. For example, the 2018 Honda Civic sedan has six different trim-level options:
There are also common trim levels such as:
- Standard: no upgrades
- Sport: upgraded engine performance and handling
- Luxury: upgraded interior and smoother suspension
Condition is huge when it comes to exploring how much your car is worth. Condition is a much more subjective factor than mileage, because mileage is reading off a number, and the condition is looking under the hood, and considering more than just the surface scratches.
Although often seen as somewhat similar, condition and mileage are not the same. One car may have low miles but look terrible on the outside due to being kept uncovered near the ocean, while another car may have 200,000 miles, but has been covered and kept in a dry location for its lifetime. When cars have torn leather seats or electronic equipment that doesn’t work, then you will see it impact the value. The same can be said regarding scratches and dents.
Because the weather is such a huge variable, oftentimes certain cars that do better in certain conditions, such as snow, seem to command higher prices. For example, convertibles and sports cars might sell for higher prices where they are in demand, such as near the beach. Four-wheel-drive trucks and SUVs do best in the Northeast, Midwest, and other areas because of the need for these vehicles in the snow.
Someone selling a reliable, and accident-free car that has a few dents might consider it an excellent vehicle, but others would describe it as good or average. Regardless, vehicles with torn leather seats, or electronic equipment that doesn’t work, as well as scratches or dents, or other similar issues will not be as sought after and will see it impact the value.
The most important aspect of a car’s functioning is the internal components. Therefore, having a car with completely functioning internal parts will make a huge difference in your car's value. If the check engine light continually comes on due to transmission failure, then your car is not going to be as much of a value as a car that isn’t dealing with transmission issues.
How the outside of your car looks is just as important as how it functions. For example, if your car is new or likes new, then it will not need to be repaired cosmetically. There should be no issues with the exterior or interior of the seats.
Most used cars are in average condition. They have normal signs of wear and tear and need minor reconditioning to be resold. It might have small scratches and dents. You may need a bit of maintenance but not too much.
When a car is in bad condition then it might have hail or water damage, frame damage, or be inoperable. In this case, you will not get much for your vehicle.
If your car does not function mechanically then you aren’t going to be getting anywhere. Therefore, it is essential to make sure that all of the various important mechanical parts of your vehicle are functional before selling the car. Covering parts up and turning off the check engine light is not going to fool a dealership. Once the car is plugged in these problems will come to light. Therefore, fixing any mechanical problems is a must before selling your vehicle.
Number of Previous Owners
Although it does not always influence the car, the fewer owners a vehicle has had, the less abuse it has probably taken. It also typically means more accurate maintenance records and vehicle history reports. Therefore, purchasing a vehicle with only one previous owner is the best way to go if you hope to resell it in the future.
Any previous accidents are always a huge red flag. Unfortunately, there is never a guarantee that there are not damaged parts after an accident, or that they simply have not been completely broken. The main reason why someone might be concerned that your car has been in an accident is that accidents can cause long-lasting damage. In some cases, they can cause problems long term that do not show themselves right after the accident happens.
Current Market Pricing
The aggregate price of vehicles fluctuates constantly. You see this all the time with new cars, and it happens with used vehicles as well. Individual makes and models go on sale, there are special promotions as well, and sometimes this can interfere with the value of a used vehicle. If the new vehicle is going for a great price, then most people are not going to be willing to pay a similar price for a used version. This is essential to keep track of so you can sell when the current market pricing is optimal.
Method of Sale
Whether you are selling privately or trading in, versus selling to a company makes a huge difference. For example, the retail price is when you purchase a car at a dealership. This means that when selling back to the dealership you will probably get less for your car because they want to make a larger profit. Selling privately is the best way to make the most money because there is no middle man.
The easiest way to sell your car is to go to a dealership as a trade-in. This means that instead of giving you money or cash for it, they will put it as a credit towards your next car. This will never give you top dollar but it may save you in sales tax and the hassle of actually working to sell your vehicle.
When going through with a trade-in you need to be careful. Most times the salesperson will try to mix all the different numbers to confuse you. They will take the price of your new car, your trade-in value, and the cost of your financing into one number that makes it seem like an amazing plan when they are overcharging you. You should look at each aspect as an individual transaction to ensure that nothing gets lost in the mix.
Another thing to keep an eye out for is that dealers are never going to give you the best price. First, off they will take care of all of the paperwork. This is only one positive aspect, but you will end up paying for it. Since they will need to refurbish and advertise the car to resell, they will need to put money into the car. This is going to cost you during the trade-in.
- Standard: no upgrades
- Sport: upgraded engine performance and handling
- Luxury: upgraded interior and smoother suspension
The one positive part of trading your car at a dealership is that it can save you some money in sales tax. This is because in most states you will only need to pay tax on the difference between your new car’s tax and the trade-in value, rather than the entire purchase price of the car. If you have a high-value trade-in, this could be a large number.
Instant Cash Offer
In the last few years selling your car for straight cash has been the best way to sell your car. This is called an Instant Cash Offer, also known as an ICO. It can be done online, on the phone, or in person. You provide the VIN as well as mileage and condition, and you get an instant purchase offer. If you are detailed and accurate you will get a more accurate price quote the first time.
Selling It Yourself
Selling your car yourself often offers the highest price, but it does not come without work to achieve it. You will need to prepare your car for sale, gather all of the paperwork, as well as meet with different buyers and finally complete the documents to sell it.
Warranties and Certificates
If your car is still under warranty then you may be able to obtain or keep certificates certifying its authenticity. This is typically only something that you find in classic cars or extremely valuable vehicles.
As one might think, the higher the mileage the lower the value. This comes from the thought that the higher the mileage, the higher the likelihood that you might find problems with the car. For example, most buyers want to pay less for a 200,000-mile car over one with 30,000 miles. This makes sense because mileage dictates the lifetime.
The value of cars and trucks dramatically changes based on where they are located. For example, trucks are purchased more in rural areas. This is because they may be used by those who work with trucks or who need them for the terrain. Sports cars or cars, in general, are typically more popular within urban populations and convertibles in coastal areas. Another example is in areas that get snow. When snow falls consumers need to have a 4 x 4 or SUV to get through the weather conditions. When cars are more desirable, the prices raise according to the demand.
If you need money for your car fast then you may sacrifice a bit in terms of price. If you want to sell your car fast, then you most likely will have to sell it for less. Some vehicles also sell faster than others due to their overall desirability. This can change based on the season or dealer sales that are going on for that particular vehicle.
What Buyers Are Looking For
Similar to that of location, how much you will get for your car monetarily has to do with what buyers are looking for. If you are selling a classic car, small things like a chassis number can make a huge difference in your car's value. On the other hand, if you live somewhere where people like to go “mudding” you may have better luck selling a truck or SUV. There are also car trends that impact this statistic.
Depreciation and Retail Price
All vehicles depreciate to some extent. Despite this, it is important to know the market values and estimates based on your vehicle's depreciation. This can allow you to know how much you should ask or generally get for your car.
Modern or Classic?
Modern cars are generally everyday cars that people take to work or commute in. Classic cars or sports cars are typically ones that they are passionate about. This is not a daily car, and instead something that is used for pleasure. It is important to know the distinction when determining your car's value because classic cars typically take longer to sell and demand a higher value. It also means that there are fewer people interested. Modern cars often sell quickly and have a lower overall value, but there will be more buyers overall.
Buyer or Seller Market?
Similar to that of the real estate market, cars fluctuate in value just like houses. When selling your car you may be lucky to sell it for anything at all or may be able to get a really good price due to the market. If the latter is true, then you are in a seller’s market, while if you cannot sell your vehicle due to a lot of inventory available, it is considered a buyers market.
How to Find What Your Car is Worth
When you are first looking to sell your vehicle you need to consult pricing guides. This will allow you to enter as much information about your car that you have. This should include the mileage and condition, and any other information asked by one of the many vehicle-pricing estimators.
Then you can choose how much you need to get from the sale. Whether you are trading in or selling to a private person, this will dictate how much you can get for your car. This is followed by looking around at similar vehicles for sale. Look within your area to see what people are asking for the same vehicle in the same condition, and how many are for sale nearby.
There are many other factors to consider as well. This means that the time of year, how popular the vehicle is, and if you have made any modifications can have an effect on the bottom line sale price. Whether your car is similar to those you see, or a bit less (or more) in good condition, then you can adjust your car’s value for depreciation. This is similar to selling a home and finding comparable properties.
Using tools available online though can be your best option to truly understand what your car is worth. Because there are so many variables and places to do so, you must examine each one, to get an accurate depiction of what your car is worth.
Tools You Can Use to Estimate Your Car's Value
Appraising your car is the first step to know what you can get for it and what you deserve to get for it. Every vehicle will depreciate somewhat, so being able to estimate puts you one step ahead. Knowing its value will also help you decide the method of sale you plan to take.
Although many online car value calculators provide you with an estimate for free, not all are created equal. These are only estimates and should not be used definitively, but can help you get a general ballpark.
We tested each of the tools below with one of our most commonly purchased vehicles, a 2005 Toyota Corolla CE in black, with standard equipment and 100,000 miles in the Dallas ZIP code, 75254, and "Average" condition.
Kelley Blue Book, also known as KBB, is an automotive shopping website. Originally founded in the late 1920s. It originally began business by publishing an actual blue book that dealerships referenced to provide car values and pricing information. Kelley Blue Book was used so commonly that the term "Blue Book" became a part of dealership language. Now car shoppers use this term as well and use it often to compare prices. In 2010, Kelley Blue Book was acquired by Autotrader. The term "blue book value" has become synonymous with selling and buying a car as KBB has become one of the most used tools for evaluating a vehicle.
- Easy to use and get an instant range of prices
- Extremely accessible and well-known
- Gives you a realistic range of prices you should expect to buy or sell a used vehicle for
- Favors dealers when giving pricing
- Can over-value or under-value certain makes and models based on recent used car sales
$1454 median price, range of $1025-$1882
Edmunds was founded by Ludwig Arons in 1966 as Edmunds Publications. This was as a publisher of printed booklets consolidating automotive specifications to help car shoppers make buying decisions. In 1988, the company was purchased by Peter Steinlauf. Now, it is known as a well-known automotive resource and a competitor of KBB.
- Most comprehensive option
- Gives you a pretty good idea of how the little things can change the overall value
- Need the vehicle's VIN to get the most accurate pricing
In 1922, NADA began studying used-car values and offering this service to its members. In the 1930s, these studies became the N.A.D.A. Official Used Car Guide. It held the U.S. government's endorsement as the nation's authority on used-car prices. About 40,000 copies were printed and mailed to subscribers in December 1933.
- Known for accurate pricing
- Car data dates back to 1926
- Favors dealers
- The website is not designed well to find values of older vehicles
Hagerty is an American automotive lifestyle and membership company. It is the world's largest provider of specialty insurance for classic vehicles. Frank and Louis Hagerty founded the company in 1984 with a focus on providing insurance for collector boats. In 1991, the company added coverage for classic cars.
Hagerty published its first annual Hagerty Price Guide in 2008. This is a valuation tool that offers classic car buyers information on how to navigate these purchases in the digital automotive age. Hagerty also started the Historic Vehicle Association (HVA) and the RPM Foundation.
- Very easy to navigate and get an estimate
- Specific to older, classic, antique vehicles
The Toyota Corolla is not considered a classic/antique car and therefore cannot find it in the system.
Cash For Cars was founded to help ease the time and effort of selling vehicles. They purchase like-new, used, damaged, and even total loss vehicles. Starting as a single salvage yard in Vallejo, California, they've since grown to be one of the world's leading online auction companies. They see the value in any car and are willing to back that up with their risk-free offers and instant quotes.
- Easy to navigate
- A quick way to get an estimate
- Most realistic overall
- Pricing may not always be as competitive because it is realistic
Getting Ready to Sell Your Car
If you are selling to a single person, then you should be sure that your car has a well-documented service and repair history. This allows you to ask for a little more as you can prove the work that has or hasn't been done on your vehicle. Be sure to find as many of the service documents as possible.
Vehicle History Report
The vehicle history report is being able to see into the car's past. In many cases, buyers will purchase a history report from companies such as Carfax or Autocheck, but you can do this yourself and have it on hand. This will also allow you to see this first yourself and be prepared to correct or explain anything negative.
In addition, if your car was in an accident at any point in its lifetime, you should have proof of what was repaired and that it was fixed by a reputable shop. This is essential if you want to reduce buyer uncertainty. Although this is not completely necessary when it comes to a trade-in or an instant cash offer. It will still save you time if someone asks to see them, or if you are trying to negotiate a higher price
Contact Your Lender
If you owe money on your car you should contact your lender. There may be specific methods for obtaining the title. If you are trading in your car or getting an instant cash offer, then whomever you are with will typically be able to do this for you. Large lenders may take longer to provide this documentation, and smaller lenders may handle this more quickly.
Preparing Your Vehicle to Be Sold
The amount of effort you need to spend in preparing your car for sale will depend on who you are selling to and the condition of your car. If you are selling to a private buyer, then you do not want to put too much into it because you may not get a significant return on your investment. You want to make sure you do not skip simple steps that might help sell your car quickly and for more money.
Sometimes There is Not Much You Can Do
If your car has 200,000 miles on the odometer, then most often no washing or cleaning will help you to get more money out of it. You may be able to paint it, but most often this will not change much. If you are selling a three-year-old vehicle with 30,000 miles, then you may want to put a bit of time into cosmetic features to sell it for more.
In states such as California, there are smog certificates, and in other states, vehicle inspections are required before sale. You may even need to provide the buyer with a warranty that says it will pass the inspection or test. If it doesn't pass, then you may have to adjust your expectations for the amount of money you may get for your vehicle.
Put the Effort Into Making the Vehicle Look Nice
With any type of sale, you want to make sure it looks great before you attempt to do so. Be sure to wash the car, wax it, give it a good vacuum or get it detailed. Clean the glass and open the windows to ensure the car smells aired out. If you have smoked in the vehicle you are going to struggle to get the scent out, and it may not be something most buyers want to purchase. An instant cash offer or dealership trade-in will require less prep work because they have their staff to detail the car and get it ready for sale.
Remove Personal Items
Since not everyone loves the Raiders, you will want to remove any bumper stickers or other personal items. You should unpair your phone, delete any personal information on any of the car's systems, and try to remove your presence in the car as much as possible.
Repair the Vehicle
Whether there is cosmetic damage or a legitimate repair needed, get this before you attempt to sell the car. Door dings, bumper scratches, or a cracked windshield is usually a cheap fix, but you should make sure the lights work, and the car starts easily.
You will want to try to avoid people walking around your car and tallying up all the issues with the vehicle because these will be negotiation points to cheapen the value of your car. The only thing you want to avoid is a major repair because that may not end up paying off with a better overall price. It is usually better to offer a discount instead of replacing the tires or brakes because these can be very expensive.
Things You Need to Know When Selling Your Car
Your Car is Only Worth What Some Will Pay for It
You can spend months looking for the best price possible on your vehicle, but in the end, everyone wants a good deal. Just because the tools above gave you one price, that does not mean that is what you will get, or even close!
If you think your car is in excellent condition, you might be wrong. Only 3% of used cars are in excellent condition according to Kelly Blue Book. This means you might estimate that your car is worth a lot more than it is. Additionally, if someone is not willing to pay top dollar for your vehicle then you will not be able to sell it for top dollar. It is simply how the market and demand are at that moment in time.
A Method to Determine What Your Car is Roughly Worth (Calculation and Formula)
Cars depreciate from their retail price by 20% in their first year of ownership and they continue to depreciate by 15% to 18% each year for the next 20 years.
X=number of years after the first year of ownership
e=the mathematical constant of e
Assuming 15% depreciation year-over-year:
Assuming 18% depreciation year-over-year:
This calculation only takes into account depreciation, not any other factors, including condition and mileage, as well as other factors. On average, most cars lose 60% of their value after their 5th year of ownership. This can also vary based on the type of vehicle and the current state of the market.
Practice Cautious Optimism, and Be Realistic
Selling a car is a lot of hard work and a complex affair. In the end, it's about making compromises with your buyer. They also had to make compromises for your vehicle. Working with your prospective buyers so that you both get what you want is the best approach to effectively selling your vehicle.
Finding Value When Your Vehicle is Involved in an Accident
When your vehicle is totaled in an auto accident, your insurance company will pay you for the value of the car. They essentially give you a value in what they believe your car is worth. This then goes towards the total amount you owe on the car (if you have remaining payments on your car loan). You can also use it to purchase a new car. This is a completely different reason why you may need to understand the value of your vehicle.
Most people who have gone through this process know how frustrating and low a car insurance company's assessment of your car typically is. Most often it is lower than anticipated, and you will not be able to purchase a replacement. In many cases, you may not even be able to pay off your car.
In many cases, you might feel clueless about how your insurance company values your car. There are random types of data and specifications that are never revealed. This can lead to low-ball offers. Despite this, you can negotiate if you are educated on what your car is worth.
Actual Cash Value vs. Replacement Cost
There is a huge difference between the value of your car when determined by the insurance company and how much it will cost to replace it. The offer you are given by an insurance company is based on the actual cash value (ACV). This is what the company assumes a buyer would pay for the car the moment before a collision occurred.
Actual Cash Value
The "actual cash value" takes into consideration a few things, such as:
- Mechanical problems
- Cosmetic issues
- Supply and demand in your local area
This is similar to if you would have sold it yourself. In the event you purchase a new car, drove it for a year, and then into an accident; the actual cash value would be a lot lower, similar to if you sold it. This is because depreciation starts at 10% as you drive it off the lot, and continues to 20% by the end of the first year. The insurance company will take this into account, as well as several other factors to give you the least amount of cash possible. Insurance companies will nickel and dime you for everything from the miles on the odometer to the stain on your carpet.
The replacement cost typically offers a better option than the actual cash value. The point of the replacement cost is to provide their customers with cash to purchase a new car. This should be easier to get from your insurance company, but the quality of the vehicle may not be the same as the one that was totaled.
Getting Started with Finding How Much Your Car Is Worth
Selling your car seems like a simple process, but it is a bit more complicated than one might think. There are many variables involved in selling your vehicle; whether you want to sell your car directly for cash, trade-in through a dealership, or sell directly to another person. The first step in any of this is to identify what your car is worth and to ensure that you know what to expect. Remember, your vehicle is only worth what someone is willing to pay for it.