Used Car Prices are determined by several factors including demand, resale value, rebates on new cars, cost of ownership, and more factors that I will cover more extensively. Used Car Prices is a topic that many people do not understand. They say to me all the time, it cost me $30,000 new so it should still be worth a good bit. But, you have to look at more factors to determine Used Car Prices.
#1 factor to determine Used Car Prices:
You have to look at what you can buy the car for new. When looking at the new price, you can not look at MSRP, you have to look at cost minus any rebates or incentives. For instance, a 2007 Chevy Silverado with 23,000 miles that cost $32,000 when it was purchased new. Now, you have to look at what you can buy that truck for now new. To determine Used Car Prices, you have to look at the alternative to buying new. Guess what, now the 2008 Chevy Silverado has $5000 rebate plus Employee Pricing. So, the same $32,000 vehicle can be purchased for approx. $22,000 brand new. Now, you have to go back from there to determine what the Used Car Price should be. You do not want to pay the same for a brand new and a year old used truck with 23,000 miles. This takes us to point #2.
#2 factor to determine Used Car Prices:
Lets say we trade for this year old truck. The next question is how much are we going to have to spend to get this truck Front Line Ready to sell. We must Certify this truck to give it a fighting chance to sell and that means checking it from top to bottom. When this truck is Certified you have to look at tires, windshield, oil change, tire rotation if not new tires, detail, scratch removal, brakes, etc. The list goes on and on. You can easily spend $800-$1200 getting the truck ready for sale. Remember, when selling your own vehicle, you are not able to offer certified. This eases customers minds because it adds to the warranty and gets a better Used Car Finance Rate.
#3 factor to determine Used Car Prices:
You definitely have to look at the demand for the vehicle to determine Used Car Prices. If it is a vehicle that is hard to sell new, it will be a vehicle that is hard to sell used regardless of prices.
#4 factor to determine Used Car Prices:
I am going to lump several in together because I believe they are similar. You have to look at the Mileage, Condition, and Options. The mileage is a big factor to determine Used Car Prices. If you have a car with over 40,000 miles, it better be Priced Right! You have to take into account the condition of the Used Car. Has it been smoked in? Is there wear on the seats? Scratches that wont come out? Etc. These are all factors that will lower Used Car Prices. Also, you have to look at the options on the Used Car. If it is a used car with a manual transmission, this is a big hit on price. Does it have roll up windows? Does it have a CD Player? Etc. Options on the Used Car is a huge factor.
#5 factor to determine Used Car Prices:
After all is said and done, Book Value is probably one of the biggest factors to determine Used Car Prices. Many use NADA and some use Kelly Blue Book or even Black Book which is used by car dealers and some banks. The biggest factor used to determine book price is the demand for the vehicle. They take new car sales and used car sales to figure how many people are buying the specific vehicle. If it is a car that is in high demand, it will fetch a higher book price. This is also how banks figure how much they will loan on the used car. The bank takes the Used Car Prices and figures how much they will loan whether it be loan value or retail value and much of this is determined from the customers credit which is a topic for another day.
All in all, you can see how much goes into calculating Used Car Prices. Much of it is subjective, but much of it is objective. Using the example above of the Chevy Silverado you have to go back from the $22000 cost of the vehicle. You deduct another $2000 (Approx.) for the miles on the truck. You figure another $1000 to get the truck ready for sale or to certify. You take another $4000 off for dealer profit and room to negotiate. You come up with approx. $15000 trade in and approx. $19,000 Retail. Used Car Prices are always misunderstood. I can see why, because if you tell me the truck I purchased 1 year ago is worth half as much as when I purchased it, I am not going to understand either!
Check out the Festival of Frugality Blog!Source URL: http://ashesgarrett.blogspot.com/2008/09/used-car-prices.html
Visit ashes garrett for Daily Updated Hairstyles Collection
#1 factor to determine Used Car Prices:
You have to look at what you can buy the car for new. When looking at the new price, you can not look at MSRP, you have to look at cost minus any rebates or incentives. For instance, a 2007 Chevy Silverado with 23,000 miles that cost $32,000 when it was purchased new. Now, you have to look at what you can buy that truck for now new. To determine Used Car Prices, you have to look at the alternative to buying new. Guess what, now the 2008 Chevy Silverado has $5000 rebate plus Employee Pricing. So, the same $32,000 vehicle can be purchased for approx. $22,000 brand new. Now, you have to go back from there to determine what the Used Car Price should be. You do not want to pay the same for a brand new and a year old used truck with 23,000 miles. This takes us to point #2.
#2 factor to determine Used Car Prices:
Lets say we trade for this year old truck. The next question is how much are we going to have to spend to get this truck Front Line Ready to sell. We must Certify this truck to give it a fighting chance to sell and that means checking it from top to bottom. When this truck is Certified you have to look at tires, windshield, oil change, tire rotation if not new tires, detail, scratch removal, brakes, etc. The list goes on and on. You can easily spend $800-$1200 getting the truck ready for sale. Remember, when selling your own vehicle, you are not able to offer certified. This eases customers minds because it adds to the warranty and gets a better Used Car Finance Rate.
#3 factor to determine Used Car Prices:
You definitely have to look at the demand for the vehicle to determine Used Car Prices. If it is a vehicle that is hard to sell new, it will be a vehicle that is hard to sell used regardless of prices.
#4 factor to determine Used Car Prices:
I am going to lump several in together because I believe they are similar. You have to look at the Mileage, Condition, and Options. The mileage is a big factor to determine Used Car Prices. If you have a car with over 40,000 miles, it better be Priced Right! You have to take into account the condition of the Used Car. Has it been smoked in? Is there wear on the seats? Scratches that wont come out? Etc. These are all factors that will lower Used Car Prices. Also, you have to look at the options on the Used Car. If it is a used car with a manual transmission, this is a big hit on price. Does it have roll up windows? Does it have a CD Player? Etc. Options on the Used Car is a huge factor.
#5 factor to determine Used Car Prices:
After all is said and done, Book Value is probably one of the biggest factors to determine Used Car Prices. Many use NADA and some use Kelly Blue Book or even Black Book which is used by car dealers and some banks. The biggest factor used to determine book price is the demand for the vehicle. They take new car sales and used car sales to figure how many people are buying the specific vehicle. If it is a car that is in high demand, it will fetch a higher book price. This is also how banks figure how much they will loan on the used car. The bank takes the Used Car Prices and figures how much they will loan whether it be loan value or retail value and much of this is determined from the customers credit which is a topic for another day.
All in all, you can see how much goes into calculating Used Car Prices. Much of it is subjective, but much of it is objective. Using the example above of the Chevy Silverado you have to go back from the $22000 cost of the vehicle. You deduct another $2000 (Approx.) for the miles on the truck. You figure another $1000 to get the truck ready for sale or to certify. You take another $4000 off for dealer profit and room to negotiate. You come up with approx. $15000 trade in and approx. $19,000 Retail. Used Car Prices are always misunderstood. I can see why, because if you tell me the truck I purchased 1 year ago is worth half as much as when I purchased it, I am not going to understand either!
Check out the Festival of Frugality Blog!Source URL: http://ashesgarrett.blogspot.com/2008/09/used-car-prices.html
Visit ashes garrett for Daily Updated Hairstyles Collection
