What is the market value of a car

Determining Your Car's Market Value

If you're thinking of selling your car, you may have already asked the question, "What is the value of my car?" Value is generally subjective and entirely depends on what you're willing to accept and what the buyer is ready to pay. This is the main challenge of determining a car valuation.

The amount you are willing to accept also determines how long it would take to sell your car. Are you ready to wait for months until someone pays you what you think your car is worth, or do you simply want to sell your car as fast as possible? Basically, you need to find a way to balance the asking price and the length of time you have to sell the car.

In this article, we'll look at car valuations and the factors that influence the value of your car. We'll also take a complete look at the advantages and disadvantages of the different pricing guides that are used in Australia and strategies to help you sell your car.

What Is A Car Valuation?

A car valuation is an estimate of the price of a car. It is the critical factor that will let you know whether you have the right price when selling, trading in, buying, or insuring a vehicle. Moreover, it also determines if the car is affordable or not. There are a couple of guides available online to help you know your car's value.

Whether trading in your vehicle or selling it, the need to know your car's value cannot be overemphasised. There are a couple of markers that you should consider, and they include retail prices from different dealers, retail value for private sale, and wholesale prices for trade-in.

You need a proper understanding of your car's value for you to be able to set prices when selling your vehicle. It's also an essential thing for buyers as it enables buyers to be able to negotiate prices effectively. Knowing your car's value will also come in handy for you when you want to claim insurance or apply for a car loan. In general, you shouldn't enter a negotiation without having this type of information.

As mentioned earlier, various tools can help you know your car's value, but not all these tools provide accurate prices. In many cases, they are simply rough estimates of the actual prices. Setting an unrealistic price for your car will only make it harder for you to sell it, and this will further incur holding and depreciation costs with time.

Factors That Determine Car Valuation

Market Demand

The market demand for a car depends on the car's popularity, time, location, and even weather conditions. For example, there has been a continuous rise in SUVs on the roads over the past decade. They have gradually become more popular than regular sedans and more preferable for various buyers.

Upgrades and Special Features

Suppose you have added a few extra features to your car, like body kits, high-quality sound systems, additional safety equipment, and gorgeous rims. In that case, the value of your vehicle is likely to be higher because of these add-ons. However, it's crucial to ensure that you do not add accessories that will affect your car's safety, durability, and performance.

Accident and Repair History

The number of repairs your car has had over the past few years and whether it was ever involved in an accident can influence its valuation. In general, recurring issues requiring continuous work reduce the value of a car. On the other hand, regular maintenance shows that the vehicle is in good condition.

Colour

Yes, colour is also a factor that can influence the value of a car. Conservative colours are high in demand because most people have traditional tastes. Examples of these colours are white, grey, and silver. Louder colours like lime green, orange and yellow are harder to sell and will only reduce the price of a car.

Odometer Reading

The year of manufacture is only a representation of the actual age of a car, and the fundamental ranking mechanism that most buyers use is the car's mileage. Vehicles that have covered more kilometres are less likely to rank high on a buyer's list. On the other hand, buyers will show more interest in cars that have only covered a few kilometres.

Age of the Car

The first factor that most people look out for when buying a car is the actual age of the vehicle. This is a factor that has a significant influence on the car's monetary value. The only exception to this is if the car is a vintage or classic car. Older cars generally tend to have lower residual value, which will tell on the price of the vehicle.

Make and Model

The precise make and model of the car are also essential factors that determine its valuation. Information from CarsGuide shows that popular car brands like Toyota and Mazda retain their value as they are in high demand, reliable, and affordable. There are specific models within each brand that stand out, for example, Toyota Corolla and the Mazda 3.

Scenarios That Would Require Valuing Your Car

Whether buying or selling your car, it's always essential to have a good understanding of its market value. Here are some instances that would require a car valuation:

Renewing or Taking Out Insurance

If you decide to take out comprehensive car insurance, you can either insure the vehicle for an agreed value or for the market value. Market value is the amount that your car will sell for if placed in an open market. The market value, in this case, is determined by the car insurance provider or insurer. This is based on the mileage, model, age, and make of the car.

On the other hand, the agreed value is determined after an in-depth discussion with your insurer. In this case, you'll need to have a good understanding of your car's value. Many people prefer this policy because of its certainty concerning the compensation you would receive.

Buying a Car

The following scenario where you'll need to value a car is when you are buying one. Whether it's an upgrade or your first car, you'll need a car valuation to ensure that you're buying it for the right price. This will also help you understand the market value of the car you want to buy, thereby improving your negotiation.

Selling a Car

Another scenario that requires valuing a car is when you are selling one. Reports from the (ABS) Australian Bureau of Statistics show that the average age of a car in Australia is over ten years. Therefore, in a decade's time or earlier, there's a chance that you'll consider selling your vehicle at some point.

If you're thinking of selling your vehicle, you'll need a car valuation so that you can know its exact worth and how you can set an accurate price for the car. This will also place you in a better position when you are negotiating with potential buyers.

Trading In a Car

With a trade in car valuation, you'll quickly know whether it's better to trade your car for a new one or ultimately sell it. This is an easy way to compare market values, as well as the offers from different car dealers, and it will help you decide the more financially viable option to settle with.

Independent Car Valuation

Here's a breakdown of some independent car valuation guides:

CarChase

CarChase offers a free car valuation tool on their website to get a competitive and fair car valuation. The benefit of using this car valuation tool is that you get results that are entirely based on benchmark book values and market dynamics. The prices are also a perfect representation of what the buyer will pay for the car.

RedBook

Another independent car pricing guide that you might want to consider using is RedBook, as this guide prepares valuation using information available from different sources. Details like factory and aftermarket options, kilometres travelled, and the overall condition of the car is considered in RedBook's valuation.

There are a few other ways to get the approximate value of your car. The use of free online appraisal tools remains a common and easy way to get the value of your vehicle, and these tools are available on a lot of car websites, particularly those that help connect buyers with sellers.

The primary drawback of using these online tools is that the prices provided are mostly estimated costs. The most lucrative way to get a detailed appraisal is to take it to a dealership or an independent valuer. This is also an option to choose when buying a car because the dealer or valuer will help you perform a pre-purchase inspection on your vehicle and ensure that there are no hidden faults before you buy it.

Other Key Factors To Consider

Transmission

The transmission of the vehicle is a factor that cannot be ignored. In recent times, manual transmission is not as valuable as automatic transmission. Depending on the vehicle's manufacturer, the prices of most new cars with manual transmission tend to be up to $2,000 cheaper than those with automatic transmission. This price difference is also applicable across the life of the car.

Cleanliness and Presentation

Presentation is vital when selling your car, and this is why it's advisable to get your vehicle professionally waxed and detailed before placing it on the market for sale. Clean cars are generally more attractive and will bring a potential buyer faster than a dirty car would.

Method of Sale

The method of sale can also influence the car valuation. For example, with a private sale, you can easily get a higher price, but this will also require a lot of effort as you would need to get a private buyer, perform a series of test drives, and agree on a fixed price. On the other hand, selling through a dealership is faster, but you may not get high prices.

You can also use online tools that help connect potential buyers with sellers to make things a lot easier for you.

Improving The Value Of Your Car

The easiest way to increase your car's worth is by keeping it in top-notch condition. This will also come in handy for you if you decide to trade or sell the vehicle. Listed below are three tips to assist you in increasing the value of your car:

• Repair faulty parts: Faulty parts can reduce the value of your car, and it's best to fix or replace them before you get a car valuation. Alternatively, you can get the costs of repairing these faulty parts to put you in a better position when negotiating with a potential buyer.

• Clean it: Ensure that the car is clean before putting it up for sale. This is for both the interior and exterior surfaces of the vehicle. For the car's interior, you might want to consider using polish to keep the surface shiny, and for the exterior, it's advisable to fix dents and scratches.

• Keep a complete service history: This can also influence the value of your car, as it's the only way to show that your car has been regularly serviced while it was in use. Therefore, always ensure that you have complete documentation before putting your car up for sale.

Should You Opt For Expert Help?

It's generally easier to get accurate prices for your car when you perform proper research before valuation. As mentioned earlier, there are several tools that you can use to help you get the value of your car, but one thing to always note is that these tools only provide an estimated value, and in some cases, it may not be the exact value you'll get in the market.

Alternatively, you can consult with an independent valuer or a dealer who will help you perform all the necessary research and provide you with the actual value of your car based on the factors provided above.