FAQ Friday: How Do I Determine a Fair Price for a Used Car?
At a time when automakers are desperate for every sale, a remarkable number of shoppers are drifting out of the new car market and purchasing a used car instead. In fact, Edmunds.com has determined that approximately 511,000 used cars sold in the past three months would have been new car sales in a more normal economy.
But how do you determine a fair price -- whether you're buying or selling a used car? The market is so volatile that you can't rely on anything from a book, because it would be instantly out of date.
Edmunds created True Market Value pricing for this very purpose. (For a cool tutorial on TMV, please click here.) Here's how you research a used vehicle's TMV price:
1. click the Used Cars tab from anywhere on the site
2. click the Appraise a Car link (just below the Used Cars tab)
3. Select the make, year, model and style of the vehicle you would like to appraise
4. Choose whether you are planning to buy or sell the vehicle
5. Indicate the vehicle's color, mileage, options and condition
6. Finally, click "Get Pricing Report" to generate a customized TMV price for the vehicle. This report will provide you with the vehicle's trade-in, private party and dealer retail TMV prices.
TMV pricing is the most accurate reflection of actual transaction prices in your area. For more information, see How We Calculate Used TMV Prices.
Here are a few bullet points for buying a used car:
- Buy a vehicle history report such as those offered by Carfax. Review the vehicle history report before going to inspect the car.
- Get an independent inspection on any used car you're considering.
- Consider buying a certified pre-owned (CPO) vehicle, which comes with an extended factory warranty.
- Evaluate cars from smaller manufacturers, since they offer surprising utility at a much lower cost than some of the bigger brands.
- Note the difference between shopping for used car at a new car dealership, an independent used car lot or from a private party.
- Read Edmunds.com's "10 Steps to Buying a Used Car" for a complete guide to the used car shopping process.
For more advice on buying or selling a used vehicle, see our Buying Tips or our Selling Tips.
- Posted by
- Joanne Helperin February 20, 2009, 12:00 PM
- Permalink
- Categories:
- Car Negotiating, Selling Cars, Used Cars
- Technorati Tags:
- Appraise a Car, Selling a Used Vehicle, True Market Value, Used Car, Vehicle Trade-In
You can also look up auction values for the car you are thinking about buying. Also, if you know someone in the business you can get run sheets and maybe find your exact car and how much it sold for at auction. Build in some profit for the dealer and you can usually get a pretty good deal.
I always warn people about putting too much stock into CarFax reports. My friend's 2001 Protegé had been in 3 major accidents...each time the repair estimates came in just under the threshold for totalling the car, but then the cost of work came in over the estimate. The result was that the car was effectively totalled THREE times but managed to squeak through with a clean title. When it came time to sell the car, we checked the CarFax for it because we were curious what it would say...
The CarFax was 100% clean. It showed that the car was bought and registered and reported a couple odometer readings. That was it, no mention of the $30,000 worth of repair work put into a car that originally cost $16k off the lot.
Clarkma5, I think the CarFax is a good first step, but then the buyer must also have a mechanic check the car before buying. Relying on CarFax alone is risky.