4 Factors that Affect the Value of Your Trade-In
It's condition, it's popularity, local market conditions, and the individual appraiser.
Let's take a look at each one.
Most people think their car is in better shape than most - but chances are that's not what an appraiser is going to think.
If you look at used car pricing guides, they usually list four levels: Excellent, Good, Fair, and Poor. Realistically, 80% of all vehicles fall under the "fair" condition.
It's very rare for a used car to qualify for an "Excellent" rating - only those stored in a garage and never driven will pass the test.
If your vehicle has a small dent or two, dings or scratches on the paint, it will likely be labeled as being in poor condition, especially if it's a late model used car.
Other factors that affect condition include the vehicle's mileage and whether it has any mechanical problems or been in an accident. Vehicles with over 100,000 miles will have an extra penalty against them.
If the vehicle has been repaired after an accident, it will be worth a lot less. Usually, the diminished value equals half the cost of repairs - so if it cost $5,000 to repair, the diminished value would be about $2,500.
The most popular used cars are generally the same models that are selling briskly as new. If brand new Hyundai Elantras are selling well, you can be confident your used Elantra will also be popular, especially if it's still the same as the current generation.
The colors and options can also make an impact on the value of your trade-in. Neutral colors such as silver, white, or black tend to hold their value best while bold colors such as red, yellow and green may not be worth as much since there are fewer buyers interested in those colors.
Local Market Condition
If you have a used convertible and live in a cold climate, it's going to be tough to get a great price. Local market conditions are a big factor when it comes to the value of your used vehicle.
You also need to be aware that some dealers may simply have too much used car inventory that overlaps with your model and won't be interested in your trade-in.
This is why it pays to shop your vehicle to several different dealers.
The final factor that can affect the price of your trade-in is the individual who appraises your vehicle.
Some of these guys have been in the business for decades and know how to get a low-ball price for your trade-in.
A common technique is to have the customer walk around the car with them while pointing out every single deficiency, such as scratches, dents, dings, dull paint, worn tires, etc.
They may pretend to hear noises when they start up the car, or while driving. These are all psychological tricks designed to devalue the vehicle in your mind.
Again, the best defense is to shop your vehicle to multiple dealers so you can figure out the true value.
3 Steps Every Car Buyer Needs to Take to Save Maximum MoneyThe key to getting the best deal is to gather price or lease bids from as many local dealers as possible. Then shop that best price around until no one can beat it. Here are the steps:
Step 1 Get Prices From My Trusted NetworkSelect the vehicle you're interested in to see if there are local dealers in my network who will provide you with their best upfront price. You will get direct access to an internet sales manager who you can further negotiate with online (no need to visit dealership).
Step 2 Get Prices From TrueCar / CarsDirectTrueCar, and CarsDirect are my top 2 online price quote recommendations. These services show you pre-negotiated prices from dealers closest to you - and the deals are usually pretty decent. But remember, you can still negotiate further.
Step 3 Complete my ChecklistFollow this up with my checklist to make sure you squeeze out every last bit of savings.
- Gregg Fidan
Each week, I'll keep you up-to-date on the latest car deals and news that might affect your purchase. This includes...
- Best Rebates, Incentives, and Lease Deals
- Latest Car Buying Scams and Tricks
- The Best & Worst Time to Buy a Car
- Which Cars You Should Avoid