Used Car Valuation – Some Useful Tips…
Are you thinking about sellingÂ or buying a used car?
It is important for you to know how much your used car is worth and what is a fair price for it whether you are planning to sell or buy aÂ used car – online or through a dealer or by placing an ad in the classifieds.
What are the factors determining the value of a usedÂ car? Here is a guide:
Depreciation is the most expensive part of owning a new car. The car’s value decreases over time, even if the car is maintained well and is in good condition. Did you know that your car depreciates in value by almost 10-15% as soon as you drive a new car off the dealership? By the end of one year, the car would have lost almost 20% of its value by depreciation. The rate of depreciation is slower for every subsequent year. By 5 years, the car’s value drops by over 60%. These figures are based on an average across all cars and could vary by brand and model.
By buying a used-car you can reduce the cost of depreciation because the previous owner would have absorbed a significant portion of the value of depreciation.
Depreciation rates vary with model and brand of the car. The cars that depreciate the most tend to be high-end luxury cars or low-priced compact cars.
Depreciation rates are also affected by introduction of new features in the model or if the model has been discontinued and parts are scarce.
It is easy to understand that wear and tear on a car increases with mileage. This influences the value of the car. More mileage means less value. If there are two cars of the same model, same year, same condition – the one with lesser mileage will be worth more than the one which has run longer distance.
Condition is more subjective than mileage but it’s as important as mileage in assessing value. If a car with low mileage sustains a lot of damage in an accident or has some mechanical faults, it negatively impacts the value of the car. Cars with torn leather seats, faulty electronic equipments, scratches or dents, worn out tyres or other issues will not be desirable for the buyer and the value of the car will be reduced.
It doesn’t have a huge impact on pricing, but more common colors â€” blue, black, white, red, metallic grays and silver â€” sell faster than more adventurous colors like brown, orange or purple.
Customisations like aftermarket wheels, custom upholstery, race exhaust etc tend to lower the value of your car. This is because the buyers may not want the same customisations. The quality of the upgrades/changes probably cannot be guaranteed since they have been done after purchase.
OWNERSHIP â€“ First Owner Vs Second Owner:
The value of the used car decreases the more number of times ownership has changed. Two cars with same model, year, mileage and condition will differ in price if one car has been with a single owner while the other has had two owners. Â This is because, it is generally believed that wear and tear is more with multiple owners.
The value of the used car holds better if the car has had regular service done on it and this has been documented. Similarly, if the registration documents are all in order, duplicate keys are available, then the value is better vis-a-vis a car that don’t have these.
At TSM, we take all these factors into consideration while estimating the fair price for your used car. We ensure that your transactionÂ is hassle-free and swift.