One of the common obstacles that consumers face when shopping for a new vehicle is understanding the equity position in their current vehicle. There are so many resources available to help people understand the value of their trade in, but sometimes all the information can create a confusing profile of the suggested value of the vehicle. Here three things you need to know about finding out the value of your vehicle. Keep checking our blog this week for additional articles on this topic.
1. Have a realistic understanding of the condition of your vehicle- When a dealership assesses your trade in person, they first look at the condition of the vehicle. The appraiser typically walks around the vehicle noting the condition of the tires, windshield, body panels (dents and scratches) and interior. They may also drive the car to listen for any noticeable noises, smoke & pet odor or operating conditions. When comparing vehicle values online, many buyers have a tendency to over assess the condition of their vehicle with statements like “it’s just a small dent” or “the tires still have some tread.” It is important to remember that even small damage or noisy, unrotated tires can detract from the value of the vehicle. If the dealer is planning to retail the vehicle, they will need to address these concerns in order to retail the vehicle or recondition it to certified pre-owned status. If the dealer is planning to wholesale the vehicle to an auction, they will consider the wholesale cost of the deductions relative to the market. Items that you should inspect closely include:
Tire Tread Depth and Wear Condition- Are they noisey? Do they all match? Do they have more than 50% (usually 5/32nd) of tread life remaining? Tires with good tread life may need replacement if they have not been rotated and balanced regularly.
Body Panels – are there any dents, hail damage or surface scratches? Do all body panels line up? Is there any noticeable paint peeling or mismatched paint work from a previous body repair? Are there any trim pieces missing or damaged?
Glass- Are there any pits, cracks or chips in the windshield? is there any scratching in the windshield or windows? Do all mirrors function properly? Do the windows have an aftermarket tint?
Odor- Ask a friend or relative to sit in your car – is there any pet odor? Smoke odor? Water Damage odor?
Wheel Condition- Wheels are one of the most expensive reconditioning items for a pre-owned vehicle, as many wheels cannot be repaired and must be replaced. Is there any curb damage? Is there any corrossion? Do all the wheels match? Are they bent at all?
Interior Condition- are there any burn holes? Juice or coffee stains on the carpets? Do the mats need to be replaced? Are there any scratches on the trim pieces from pets? Is there pet damage on any of the windows or seats?
Accident History- Dealers often run an accident history report for customers who are buying vehicles, usually dealers also run them for vehicles that they take in trade.
Driveability- Are there any clunks, pulsations, vibrations or noises? Is there evidence that the vehicle was well maintained? When was the last time the battery was replaced? Does the transmission shift properly? Do all interior features and functions operate properly?
2. Online Guides are Great…
There are plenty of online resources that can give you an idea of what your car is worth. But remember, at the end of the day the car is worth what the market (buyers and sellers) are willing to pay for the car. There are three key areas where most guides miss the mark.
The guides often don’t accurately portray the condition of the vehicle- they categorize Excellent, Good, Fair, Poor Etc. The best way to understand the value is to have a dealer, or several dealers look at the trade.
The guides don’t account for the dealer’s disposal method of the vehicle. Many times the guides give trade in values based on the assumption that the dealer will retail a vehicle instead of sending it to the auction. In this case, recent auction data is the best way to determine a vehicle’s value.
The guides often don’t account for the market’s supply of and demand for used vehicles. Basic economic theory suggests that an increase in supply, with steady demand will result in a downward pressure on price. Dealers view supply and demand on a per vehicle basis. For example, if there are 100 Brand X Cars in a 50 mile radius with a sales rate of 1 Brand X car per day in the marketplace, the days supply of the market is 100 days. The dealer can expect the car to sit on the lot for roughly 100 days. During this time, the value of the car could rise or fall dramatically depending on market conditions.
There are a lot of choices out there for online value guides, and many of them do have some great information. However, the best way to get an accurate value on your car is to take it to a dealer that uses a live market inventory service. This service allows the dealer to compare your car to live market data including auction data, sales history and surrounding market prices. Acton Ford uses live market data to value their trades.
3. Build a strong value case
The best way to find out what your car is really worth is to provide the buyer (Dealer or Private) with as much information as possible. The more information that you can provide about the car’s ownership history, maintenance history and warranty history, the more value you can typically extract from the car. Here are some questions that you should be prepared to answer and document.
Do you currently have factory, powertrain or extended warranty on the vehicle? if so, is it transferable?
Do you have a complete maintenance history for the vehicle?
Do you have 2 sets of keys and an owners manual for the vehicle? Do you have the title in hand, or is there a payoff?
If the vehicle was in an accident, can you document the extent of the damage?
These are great questions to be prepared to answer. Just remember that spending $1000 in repairs or maintenance doesn’t add $1000 of value to the vehicle, but it certainly helps!
If you would like to find out what your trade is worth in the Acton, MA area, contact our General Sales Manager Mark Nelson for a complimentary appraisal.