With a vehicle often being one of the most expensive items a person is likely to buy, you might well be wondering "How much is my car worth?"
That question becomes even more important when the time comes to sell your car, because whether you're selling it 100% online, trading it in, or selling it privately, the value of your outgoing car is just as critical as the overall purchase price of your next car.
In this guide, CarGurus explains how to determine how much your car is worth, and some of the differences you'll encounter according to how you sell it.
There's no hard and fast determination of current market value. Pricing can change year-to-year, month-to-month, or day-to-day depending on countless factors. Market conditions can fluctuate. For instance, in the summer of 2021, used car values were on fire, thanks to a wild economy paired with an international microchip shortage, a phenomenon that not even the sharpest of analysts could have predicted.
No matter what the world's economic conditions may be, however, there are seven key factors that you can count on to determine any car valuation. These are:
The impact of some of these factors on your car's value are obvious: A 2020 model year is going to be worth more than a 2010. A fully loaded Honda CR-V Touring is going to be worth more than a lower-level CR-V LX with no options. A Ford F-150 with 200,000 miles is going to be worth less than an identical Ford F-150 with 40,000 miles.
Your car's condition, on the other hand, is pretty subjective. Suffice it to say that if you expect top dollar for a car, you need it to be in top vehicle condition.
Finally, your car's vehicle history report is going to come into play. If you have had a reportable accident that shows up on the vehicle history report, you're not going to get the best trade price or the best asking price on a private sale, because those accidents dramatically alter the value of your car. In general, a dealership is only going to be able to sell a car on its lot if it has a clean vehicle history report. Otherwise, it'll go straight to a wholesaler and be sold at auction, and the dealer has much less wiggle room on the price they'll offer.
So now you know what factors go into determining how much your car is worth, let's examine how its value can also be impacted by how you sell it: instant cash offer, trading it in, or via a private listing.
Instant cash offers, where you upload your car details online and get a valuation there and then, are a relatively new way of valuing and ultimately selling your car. To get an instant cash offer, simply enter some details like your car's make and model and its mileage, and you'll be presented with an offer. How these offers are sourced depends on the website.
If you choose to accept an instant cash offer, the next step is for somebody to come and inspect the car. At this point any price adjustments will be negotiated and, if all parties are happy, the car will be picked up and you'll get paid.
The trade-in is an incredibly convenient option for both consumers and sellers. It allows a consumer to simply walk away from the car that they're currently driving, and then leave in a brand-new or preowned car the very same day. There is, however, a price for this convenience, because if you trade your car in you are likely to get less for it than if you sold it via other methods.
For the dealer, trade-ins are an excellent source of used car inventory. In fact, in many cases the used cars on a dealership's lot will come from customers trading in their cars. The issue for dealers is deciding whether they can clean the car up and put it right out on the sales floor at retail value (potentially turning a good profit), or if it has to go to the auction (meaning that the dealership is just a conduit between you and a wholesaler).
As such, if you're driving a particularly hot product in great condition with low miles and a clean vehicle history report, you've got an opportunity to get a strong trade offer from your retailer. They want to put you in a new car, and they also want your good-quality used car, so they'll work to make a good deal on both ends. But if you're driving a 2007 Kia Rondo with a different color fender and four mismatched tires, you're going to get the wholesale price for that car—which could be next to nothing.
Thanks to online shopping tools and marketplaces, determining your car's private party value is easier than estimating a trade-in value. Look at prices of similar vehicles listed in your local market, and deduct enough to tempt buyers who aren't concerned with purchasing from a dealership.
Private sales typically net good returns for the seller, but there's real effort in selling privately. You need to take a bunch of good pictures, collect all the information you can about your car, and write a descriptive ad. After that, you have to weed through all the nonsense responses to your ad like "Is the Toyota still available?" or "$500 cash and my broken Honda ATV, final offer." If your vehicle is desirable, don't be surprised if you get some of these messages.
At the end of this process, you'll likely have some shoppers interested in coming to see your vehicle. Having strangers come to your house to inspect your car might not make you comfortable. It's good advice to meet in a safe location. Many police departments make their parking lots available for exactly this purpose. Check with your local police department ahead of time.
The potential car buyer may want to have the vehicle inspected by a mechanic, in which case you need to drive it to the mechanic and wait around while it's inspected. Have several buyers ask for the same thing and it can become a real drain on your time. As such, when thinking about how much your car is worth as a private sale, don't forget to factor in at least three or four hours of your time that'll be needed to advertise and sell the car.
Ultimately, how much your car is worth depends entirely on how much somebody is willing to pay for it. Go for a private sale and that might well be more than it would as a trade-in, but don't forget to account for the extra time and effort this will take. An instant online offer, meanwhile, almost sits in the middle of the more traditional routes of private sale or dealership trade-in. You still might not realize as much value from your car as you would with a private sale (although don't rule it out), but selling 100% online is generally extremely convenient. And with zero commitment to taking any action on your valuation, at the very least an instant online offer can be a great first step into finding out how much your car is worth.
This story was produced by CarGurus and reviewed and distributed by Stacker Media.