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How is vehicle trade-in value measured?

How is vehicle trade-in value measured?

If you’re planning to buy a new car, a trade-in usually forms part of the process. Along with the car loan and down payment, selling your old vehicle is a key way to finance your new one. But how is the trade-in value of your old car calculated?

Different dealerships work in different ways but there is a set of key considerations we all take into account.

They are:

  • Make, model and trim
  • Year of manufacture
  • How many miles it has done
  • Vehicle service history
  • Any insurance claim or accident history
  • Overall condition
  • Average prices for like for like

Make, model and trim

The make, model and trim of your vehicle makes a big difference to the trade in value. Some brands hold their value better than others while other manufacturers are more sought after than others.

Higher trim levels means more technology and features, which can also increase the value.

Year of manufacture

The newer the car, the more it’s worth. This is true for any car or truck except classics.

How many miles it has done

The more miles the car has driven, the lower the value. The mileage feeds into the wear and tear and likelihood of major components requiring replacement in the near future.

Vehicle service history

A well-serviced vehicle is often worth more. It demonstrates care has been taken and that components have not been left until they break to be replaced.

Any insurance claim or accident history

If a vehicle has had insurance claims against it or has been in an accident can have an effect on its value. Minor issues such as bodywork have little impact on value as long as they have been professionally repaired.

Major accidents can have more influence over the perceived value of the vehicle.

Overall condition

A trade-in that’s in good condition will need less work from the dealership before resale. Therefore, the dealer can afford to value it slightly higher. A car in poor condition will need more work. It is also a sign that the car may not have been cared for and could be hiding more issues.

Average prices for like for like

Average prices for like for like means the current selling price for the same make and model as your trade-in. The dealer needs to know how much it will sell for before coming up with a value.

All those elements combine to deliver a fair trade-in value. There is an element of opinion there too but these considerations are what we generally use to come up with a price.

Next week we’ll cover how to prepare your car for trade-in so it gets valued as highly as possible!

Categories: Car News