How to Figure Out the Value of a Used Car

Millions of used cars trade hand every year in the United States. It’s a major financial purchase for most people, yet very few actually know how to calculate the value of the car they purchase. With such an important decision, it’s essential to know if you are getting a good deal or getting ripped off.

Even though a car may seem like a good deal, it may not be worth the price take. Here are a few tips you can use to help you determine the value of the car before you buy.

Do Your Homework

I’ll assume you’ve already done some shopping around to find a car that you like that meets your needs. All that’s left to do is determine whether the car you want to buy is a good value for the asking price.

Don’t make an offer the first time you see the car. It’s OK to ask for time to think about it. Even if the dealer can’t promise the car will be there when you come back, It’s better to walk away completely than to risk making a bad decision.

Once you find your dream car, you’ll want to do a little research.

• Find out how much the car cost new. This is a good starting point for price negotiations, especially if the car is still fairly new. Older cars should be less expensive than newer models. New cars typically lose 30% of their value in the first three years. After five years, it may have lost up to 65%. You can use this as a quick estimate of fair market value.
  

• Use a price guide. Kelly Blue Book has been around for over eighty years and many people use it to price their cars. The Kelly Blue Book is also online for quick valuations. You can also find local price guides to help you price the car in your local market. The same car in New York might sell for much more than it would in Omaha, Nebraska. The classified section of your local newspaper may have some asking prices for similar models.
  

• Figure out if the model is still in production. This will have a bearing on whether you can still get parts. If you can’t get parts, even the smallest repair could be very costly.