Used Car Values
Getting the Numbers that Matter
Do you know how to determine used car values accurately? This knowledge can potentially save you thousands of dollars.
What You'll Find Here
Buying from Franchised and Independent Used Car Dealers
How to Determine Wholesale Used Car Values
Buying from Private Sellers
Used Car Price Estimate Worksheet
Buying from Franchised and Independent Used Car Dealers
A franchise dealer with a used car operation will usually price his cars at some percentage over what the car is deemed to be worth on the wholesale market. The wholesale used car value is usually determined by such things as the demand for the car coupled with the age, make, model, options, mileage and general condition.
The dealer's markup on a used car, van or pickup is frequently determined by any or all of several factors.
- First, there's the price he paid to acquire the car. He might have taken it in trade against a new car - which means that he accepted the car in lieu of cash or he might have purchased it from a private seller, a wholesaler or bought it at auction.
- Second, he will add what it has cost him to repair and recondition the car.
- Finally, he'll add a markup to cover his profit objectives and to pay for his overhead.
The markup will also reflect such things as the condition of the car, the mileage, the make, model, options and most important, the market demand. The point, simply, is that used car markups will vary greatly for any number of factors.
Your objective is to discover the fair wholesale price and what the dealer "has in the car." In other words: What has it cost him to buy and recondition the car and put it on his lot. That will give you the basis for planning your negotiation. Click here for more information on used car pricing. Learn about how a dealer determines what he will pay a seller for a trade-in car and the price he will ask if he offers it for sale on his lot.
How to Determine "Wholesale" Used Car Values
Whether you buy from a private owner or a dealer, one of the most important pieces of information you can have is the current "wholesale" used car values in your area of the country.
Get the Auction Prices
Possibly the easiest and most accurate way to establish the wholesale price of your car is to find out what cars like yours are bringing at the dealer-only auctions like the Manheim Network. The Car Smart Shopper can help you do exactly that.
But What About the Used Car Guides?
Yes, they do have used car prices. But they very fact that they were printed months ago dates the information. Further, in most cases, they reflect national wholesale prices, not those associated with your area of the country.
Getting the Price that Matters
Once you have the estimated wholesale used car value, you need to get an idea of how much money the dealer has invested in the car. In other words:
- What did he pay the previous owner? You can bet it was below the wholesale price.
- How much has he spent on repairs, new tires and reconditioning?
- Does he have interest and miscellaneous charges that have to be paid?
- If he bought it at auction, he has to recover the fee he paid the auction house, The cost of trucking the car from the auction to his dealership, reconditioning expense, any mechanical or body repairs and detailing.
- You can also figure that he wants to make enough on the car to pay his salesman, contribute to his overhead and make a profit.
Generally, though not always, dealers like to keep the additional cost at less than $1000.00. Much less if possible.
Click here for a used car price shopper tactic you can use to get an approximate idea of what the dealer has invested in the car.
Buying from Private Sellers
If you're buying from a private owner, you'll also want to know the true wholesale used car value. There are two methods of getting the numbers that matter.
- First: As outlined above, go to The Car Smart Shopper and get the most recent wholesale price.
- Second: After you've performed the inspection outlined in this segment, and before you go to a mechanic, ask the seller if you can take the car for a drive...Alone. To ally his or her fears, leave your car as ransom.
Take the car to the nearest used car dealer and tell them you'd like to sell the car. If you're nervous about seeming not to know as much as a real owner would about the car, tell the used car dealer that you're selling the car for a relative and that you agreed to get some idea of what it was worth. If you have time, make at least two stops...one at a dealership that sells the same make.
Frequently a used car dealer will be able to spot frame damage or other problems that you might not have seen or have overlooked.
Recently, a friend of the author's was instructed to do the above and discovered that the wholesale price was actually $4800 below the asking price because the car had been in an accident and suffered frame damage.
Once you know the wholesale value of a private seller's car, you can adjust your negotiation strategy accordingly.
Click here for Used Car Price Estimate Work Sheet
