New data released by British Car Auctions (BCA) show that used car values are improving.
Figures released in BCA’s Quarterly ‘Pulse Report’ have revealed that the average value of a used car in the first quarter of 2012 was £6,114 – the highest first quarter figure recorded since Pulse began reporting in 2005. (Read More)No Comments
Whilst you own your car you really should be aware of how much it is worth, you need this information when you are insuring the car, in the event of an accident, when buying a car and when selling a car.
Just because you tell an insurance company you car is worth £10,000 it doesn’t mean this is what they will pay you if the car has to be declared an insurance write off. Insurance companies will look at the value of cars and then make you an offer. They are supposed to offer you the retail value of your car, that’s how much it would cost you to replace the car like for like (make, model, condition and mileage). In many instances the insurers are now offering closer to trade valuations. That is what a dealer would be able to buy your car for, before they add their costs and profit margin.
By checking what your cars trade value is on Free Car Valuations you will be able to make a judgement on whether or not the insurance companies have made you a reasonable offer or not.
Finding out a cars trade value is also useful when you are negotiating a part exchange valuation when buying your new car. It is also valuable information to have when you are buying a new car from a car dealer. It may give you an indication perhaps as to how much they have paid for the car and how much profit they will have in it. Of course they have to factor in the costs of their advertising, car preparation, servicing, any repairs and warranties so don’t assume the difference between a trade valuation and retail price is total profit. You will be surprised how little net profit there is in some deals.
Also finding out what your car is worth in the trade will help you figure out what you should ask for it if you were to try and sell it privately. A rough guide to private selling prices should be somewhere between the retail and trade value.
Our trade values will provide a guide as to how much you would get for your car in either part exchange or by selling it to a cash for car company such as ourselves. Obviously these are only guide valuations and the price of your car could be worth more or less depending on a number of factors such as:-
The word I am talking about here is most commonly associated with the motor trade and it’s very mention is enough make every vehicle owner shudder.
It’s depreciation!…there I’ve said it!
A dictionary definition goes something like this: “A decrease or loss in value, as because of age, wear, or market conditions.”
Unless you’re lucky enough to have something like a 1957 Ferrari Testa Rossa or a weird and wonderful classic Bugatti lurking in the back of your garage, it’s almost certain that your vehicle is currently in the throes of depreciation as we speak! It truly is the “silent thief”.
So what causes it? And if we can’t prevent it, how can we best limit it?
Well, depreciation “kicks in” the very second a brand new car is driven off the dealer forecourt. The initial buyer has paid the ‘retail price’. From the second it hits the road, it’s down to it’s ‘wholesale price’ (what anyone else would be prepared to pay from that moment). This could be a reduction of anywhere between 15 and 40 per cent.
After that, the general ‘rule of thumb’ is that most cars tend to plateau at losing between 15 and 20 of its value per annum, though the depreciation does slow slightly as the car gets older.
The biggest single factor which determines exactly how much a car depreciates is supply versus demand.
If a car is low in supply but high in demand, it will probably retain its value better and vice versa. For example the cars that depreciate fastest are the mass-produced models sold at big discounts to the rental or fleet market. These models flood the used car market when the fleets start to replace their vehicles.
Another big factor which determines residual value is brand reputation/notoriety; Whether real or not, there is a long-standing perception of quality and value. These beliefs can be cultivated by the effectiveness of advertising campaigns, aesthetics, positive/negative press reports and word of mouth.
Design can also play a huge part. Cars with a current, bold look such as the MINI Cooper are in demand and thus worth more. Once or twice a decade, a manufacturer may completely re-design a model and, in general, the first year of that new-look model will hold its value better than subsequent years, whilst also rendering the pre-existing model less desirable.
When it comes to features or ‘options’, owners should be aware that with things like cruise control, air-con and alloy wheels, it isn’t so much a case of them adding value to your vehicle, but that value is deducted in their absence! The same can be said about service history. As for exterior, an exotic colour may look great to you but not to a future buyer! Popular colours such as silver, grey and black tend to hold their value better.
It almost goes without saying that the mileage a car covers can drastically effect its value. Lower mileage cars may be a little more desirable so hold their value a bit more. Higher mileage cars are often shunned by franchised dealers and so their value is reduced more dramatically.
Finally, the level of depreciation is indirectly affected by areas of ownership cost, namely maintenance, repair, fuel and insurance. Any model with a history of costing an owner big bucks in these areas will inevitably suffer in the re-sale market.
So, in summary, all cars lose money – fact! But, if you want to limit the impact of depreciation, you should follow these guidelines;
Buy a desirable, nearly new/second-hand model (at the right price of course!) in a popular colour with all the essential ‘options’ for its class. This will ensure you have a ready-made audience of purchasers when you choose to sell.
Look after it by cleaning the vehicle inside and out at regular intervals. And keep those service records up to date. Using a reputable independent dealer will invariably carry more clout than a cheap, ‘back-street’ operation. Keep the mileage down as low as possible.
Watch out for new replacement models. If there is an all-new replacement for the model you are currently driving on the horizon, be aware dealers tend to heavily discount the outgoing model which will affect the market value of your vehicle. so, if you are thinking of selling you car, do it well before the new model hits the showrooms!
What a minefield!!! How do Car Value Calculators work???
Valuing a car in today’s market is a difficult task, there are so many factors to be considered and getting it wrong could cost you thousands.
If I wanted to value a car today I would have to make sure I check a number of different factors before I could even attempt to give a car valuation. Giving a car valuation is one thing, but providing a car valuation that you then may be asked to back up with a firm offer to buy the car is another matter.
There are many websites and providers that will give you a value for your car, but it is relatively easy to value a car if you don’t have to worry about buying the car and then second guess what the market is going to do when you yourself have to sell the car on for profit!
Car values change each month when the new industry guides are released. Normally these are at the end of each month. During the last week of the month you have to consider what may happen to the price of cars in the next guide that is due to be released as any car you buy in the last week would be subject to any reduction in value in the new guide.
The most common guides used in the trade are not Parkers or Whatcar but Glasses’ and CAP (Car Auction Prices). Both these guides follow the market closely and usually set the price for what cars are worth.
I use both these guides to asses a cars true worth within the trade, but they then I also know those cars that are “below book” (meaning they are not worth what the guides say) or those that are “into book” (meaning they are worth more than what the guides say).
Car Value Calculators normally work on just one of the guide prices, perhaps adjust it a bit for the mileage and then give you an approximate figure.
Free Car Valuations Car Value Calculator works in a similar way, but it is monitored to make sure it is as accurate as an automated car value calculator can be. Anyone saying I want to sell my car after receiving our initial value can then ask us to provide a fixed offer to buy their car. This is done manually based on the extra information we request and taking into consideration the guide prices and current market conditions.
Remember your car is only worth what someone else is willing to pay for it. Just because you may have seen one advertised at a higher price, it doesn’t mean that car is actually worth that. Many dealers have over aged, over priced stock at the moment that they simply can’t afford to sell for less as it would show as a loss on their books, they’d rather have it showing as a stock value!