Understanding your used car trade-in value should be simple and straightforward. Unfortunately, it’s usually one of the most confusing parts of buying a new car.
A new car is typically one of the most expensive purchases a person makes in their entire lifetime. So when the time comes to trade that car in, it’s understandable that people want to recover as much of its value as possible.
The trick is finding a simple and reliable way to determine their used car trade-in value. As many consumers find out the hard way, this is easier said than done.
The Harsh Reality of Vehicle Depreciation
You probably understand that your car started depreciating rapidly as soon as you drove it off the lot. But even with this knowledge, it’s still hard to imagine what that depreciation really means in terms of dollars and cents.
You’re still driving it to work every day. It still runs pretty good, it has all the same options and upgrades, and you’ve kept it clean and generally taken good care of it. It still has to be worth a lot of money, right?
At this point in our article, it might be best for you to go grab a calculator. We really don’t want to be the bearer of bad news.
“Depreciation accounts for almost 40 percent of the cost of owning a new vehicle, more than $3,000 per year,” a AAA spokesman recently told CNBC.
Of course, that doesn’t mean your trade-in has no value. You’ve just got to figure out how much of its original value it still has.
Most people choose one of two methods to determine their used car trade-in value: ask a dealer, or check the book value. We’ll take a look at both of those below. As you’ll see, there is another (often better) option that we’ll discuss as well.
Option #1: Ask a Car Dealer
Some people simply walk into a car dealership with no idea about how much their car will be worth in trade. An hour or so later, many of these people walk right back out feeling upset about the trade-in offer they received.
If they haven’t done any research to understand what their car is worth, people assume their car is worth a lot, and it’s hard for them to believe that the dealer has given them a fair deal. It’s fine for people to have a high opinion of their car, but it’s also important to understand the dealer’s perspective on trade-in value.
The dealer has to consider the condition of the car, its age, mileage, the local market supply and demand for the specific make and model, and more. There are a lot of factors in play, and it’s easy for the typical driver to overlook any one of them.
The dealer also needs to account for their disposition costs - the cost of getting your trade-in off of their lot.
If the dealer chooses to add your trade to their used car inventory, they will need to pay for cleaning and detailing, registration and title transfer, advertising expenses, and likely some mechanical or aesthetic repairs.
If the dealer can’t retail your trade-in for one reason or another, they will likely send it to a wholesale auction. The car will fetch a lower price at auction than it would in a retail sale, and there are also several costs involved. The dealer must pay to transport the car to the auction, pay a fee to list it for sale, and pay another fee if and when it sells to another dealer. If the vehicle doesn’t sell in its first auction, the dealer will likely need to pay a storage fee to keep the car onsite until the next auction takes place.
Selling a car is often an expensive proposition, so keep that in mind when you’re talking to your dealer about your used car trade-in value.
Option #2: Research Book Value
The second option many people choose when they’re trying to find the value of their trade-in is to research book value using any of the publicly available “books” or vehicle valuation guides.
There are several different resources, from several different publishers, that provide estimate value ranges based on a vehicle’s year, make, model, and condition.
The biggest problem with book value is that books don’t provide an exact value for a specific vehicle. Instead, they provide a range of estimates that can vary widely depending on the condition of the vehicle and the type of transaction - wholesale, retail, trade-in, or private party sale.
Book value is intended to be a starting point in vehicle valuation. It gives all parties a frame of reference to consider before they take into account the vehicle’s unique condition, history, and maintenance records; as well as the local market supply and demand. It does not give anyone a guarantee or a check they can take to the bank.
Determining book value is only the first part of the vehicle valuation process, and it often leaves people scratching their heads or mistakenly overestimating the value of their car.
Unfortunately, this often leads to unpleasant negotiations as drivers and dealers butt heads over where a particular car belongs within a wide and confusing range of estimated values.
Option #3: Get a Professional Vehicle Appraisal
Many people don’t think about getting an appraisal for their daily driver, although having a professional review all of the details is without a doubt the most accurate method to determine used car trade-in value.
Hiring an appraiser takes time and costs money, and people in smaller towns may actually have trouble finding a qualified appraiser in their area.
That’s where we come in. Thanks to recent advancements in mobile technology, The Appraisal Lane can now connect anyone with an internet connection to a whole team of professional car appraisers.
You simply provide your VIN number, which identifies your unique vehicle, some basic information about your vehicle’s condition, and upload some current photos.
Our appraisers will give you an exact value for your vehicle in 30 minutes or less. Every appraisal comes with a guaranteed offer that can be redeemed for cash or trade-in value at a dealership near you.
Best of all, the entire process is completely free.
Final Thoughts: Getting Your Exact Used Car Trade-in Value
Many people get confused and frustrated when they’re trying to determine exactly how much their car is worth.
Researching one book value gives you a range of estimates rather than an exact number. Rather than helping you to narrow the range down, researching a second book often leaves you with an even wider range.
This is a pretty big problem when you consider that a car is typically the most valuable (or second-most valuable) asset most people own. When it comes time to trade in your car, don’t hesitate to get a professional appraisal.
With The Appraisal Lane, you can get your exact value in 30 minutes or less, and it won’t cost you a dime.