How to Figure Out the Value of a Used Car

Millions of used cars trade hand every year in the United States. It’s a major financial purchase for most people, yet very few actually know how to calculate the value of the car they purchase. With such an important decision, it’s essential to know if you are getting a good deal or getting ripped off.

Even though a car may seem like a good deal, it may not be worth the price take. Here are a few tips you can use to help you determine the value of the car before you buy.

Do Your Homework

I’ll assume you’ve already done some shopping around to find a car that you like that meets your needs. All that’s left to do is determine whether the car you want to buy is a good value for the asking price.

Don’t make an offer the first time you see the car. It’s OK to ask for time to think about it. Even if the dealer can’t promise the car will be there when you come back, It’s better to walk away completely than to risk making a bad decision.

Once you find your dream car, you’ll want to do a little research.

  • Find out how much the car cost new. This is a good starting point for price negotiations, especially if the car is still fairly new. Older cars should be less expensive than newer models. New cars typically lose 30% of their value in the first three years. After five years, it may have lost up to 65%. You can use this as a quick estimate of fair market value.

  • Use a price guide. Kelly Blue Book has been around for over eighty years and many people use it to price their cars. The Kelly Blue Book is also online for quick valuations. You can also find local price guides to help you price the car in your local market. The same car in New York might sell for much more than it would in Omaha, Nebraska. The classified section of your local newspaper may have some asking prices for similar models.

  • Figure out if the model is still in production. This will have a bearing on whether you can still get parts. If you can’t get parts, even the smallest repair could be very costly.

  • Do some comparison shopping. You’re probably already tired of visiting dealers, but take a day to do another round of window shopping with the specific car in mind. You may find the same or similar car offered at a lower price at a different lot. Don’t forget the Internet. Online shopping can offer the ability to check many different dealers all over the country in a very short time. You’ll quickly get an idea of the price range your car should fall into.

  • Be careful of any car that falls outside of the normal price range. If the car is priced too high or too low, find out why. Ask questions and don’t buy unless you get believable answers.

Order a Vehicle History Report

Order a report from a reputable service like CarFax. A vehicle history report will tell you a lot about a car simply from the vehicle identification number, or VIN. The car’s history will reveal accidents, major body or service work, salvage dates, and whether the car was ever used in a rental, limousine, or taxi business. You can find out a lot of information from this kind of report that could effect your decision.

Check the Car Out Before You Buy

Never buy a car without test driving it. Make sure you drive it under a number of conditions. Take in on the highway to see how it accelerates. Drive it around town to see how it feels in traffic. Listen for noises or potential problems

Have a trusted mechanic check out the car with you. This is especially important if you don’t know much about car maintenance. A second opinion from someone you know and trust will really help you understand if the car is a good value for the price.

Deal Only with Reputable Dealers

The stereotype of the used car salesman is that of a slick and sleazy huckster in a plaid sports jacket talking too fast and pressuring you into a car you don’t want.

Fortunately that stereotype is dying. Today’s used car sales people are sales professionals who are really interested in helping you find the right car for you at your price. They are interested in delivering good customer service and having a satisfied customer is important in delivering referrals.

That being said, not all car sales people operate this way. There are still dealers who will try to sell you a less-than-desirable car at a price way above what its worth. You can usually tell if a sales person has your best interests in mind. Don’t deal with dealers you don’t trust or who make you feel uncomfortable.

Ask around for a referral. Your friends and family will usually be honest about their experiences with certain dealers.

Even without a referral, you can still check up on the dealership by contacting the Better Business Bureau or the local chamber of commerce.

It’s important to determine the value of any car before you make a purchase decision or sign a contract. Fortunately for the consumer, there are a number of resources for determining if the asking price is really a good value.

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