Negotiating used car trade-in value with car shoppers is a common occurrence across today’s auto dealerships. There are many reasons why a used car’s trade-in value matters. With many car shoppers using their trade-in as a down payment for a new vehicle and others seeking to explore refinancing options, trade-in value has the potential to severely impact the car buying experience for buyers and sellers alike.
What Factors Impact Car Trade-In Value?
Determining used car trade-in value can be a complex process for many reasons. In this regard, transparency is key. While it may come as no surprise that newer vehicles in great condition fetch a higher trade-in value, there are many other aspects of the vehicle to consider before determining a fair price.
With so many factors determining the true value of a used vehicle, dealerships are tasked with ensuring accuracy and fairness with every transaction. Here are some factors that can help determine the value of a used vehicle, as well as how dealerships can ensure accurate pricing and a better experience for shoppers.
1. Make and Model
Market conditions play an important role in determining used car trade in value. Certain makes and models of vehicles stand out for their quality, reliability and reputation for durability. Brands of this caliber include Mercedes-Benz, Toyota, and Honda to name a few (4). Popular models are also more likely to earn a higher trade-in value. These can vary by geographical region. For example, sports cars may be more popular in warm, sunny climates, while off-road vehicles may be more preferable in regions that contain rugged, rocky terrain.
2. Age
Age isn’t just a number when it comes to used car trade in value. It is widely known that some older, classic cars can sell for upwards of tens of thousands of dollars in today’s market. However, car depreciation is a major consideration when shoppers weigh their options between buying and leasing. For today’s ordinary vehicle, time is certainly a factor. Once a car is driven off the lot, its value decreases rapidly. In fact, this percentage can range from as much as 20-30% in the first year, and a 60% decrease in value after five years.1
3. Mileage
A vehicle’s mileage is highly significant when determining the trade-in value of a used vehicle. In fact, a vehicle loses up to 20% of its total value after each 20,000 miles it is driven.3 In fact, vehicles that have over 100,000 on them are often seen as a red flag in the eyes of shoppers. Given that the average driver drives anywhere between 12,000 to 15,000 per year, the potential for problems arise over the years, making older vehicles an unfavorable choice for buyers due to the risk of mechanical issues.2 For drivers who frequently commute, trade-in value depreciates even further.
4. Maintenance
The truth is, the more a car is driven, the greater the chance mechanical issues may arise. Not only is regular maintenance crucial to ensure cars remain drivable and reliable, but repairs also play a role in a used vehicle’s trade-in value. Whether due to general wear-and-tear or a serious accident, this type of issues can cause your vehicle’s value to be cut by as much as half.2 As a general rule of thumb, manufacturers advice servicing a vehicle every 12,000 miles or every 12 months.3
Other factors that may affect trade-in value include general vehicle upkeep. Drivers accustomed to eating, drinking, and smoking will inevitably place more wear and tear on their vehicle, which can result in a lower valuation when the time comes to trade in. Drivers hoping to maximize their used car trade in value ought to minimize the risk of mishaps.
5. Appearance
From a car’s interior to its exterior, appearance is a critical component estimators use when determining trade-in value. When it comes to the vehicle’s interior, dealerships and shoppers alike pay close attention to a vehicle’s upkeep. Rips, tears, stains, and odors can all reduce the price of trade-in value. Drivers are advised to restore the interior of their vehicle as best as possible before a trade-in, giving them a greater chance of getting maximum value for their vehicle.
When dealing with a car’s exterior, cosmetic issues such as bumper decals, incompatible tires, and the presence of alterations and other customizations can all reduce a used vehicle’s trade-in value. Other special considerations may include cracked windshields, broken lights, dents, dings, and paint scratches, as well as performance-enhancing add-ons, like wheel kits and suspension, that may even void a vehicle’s warranty.5
Even a vehicle’s color can impact its car trade-in value. For example, neutral hues like black, silver, or white never go out of style, and tend to result in a greater trade-in value, whereas bright shades and limited-edition colors may result in a lower trade-in.5
6. Enhancements
While customizations and alterations can negatively impact the trade-in value of a vehicle, certain add-ons and enhancements can have the opposite effect. For example, enhancements like backup cameras, infotainment systems, hands-free parking, and adaptive cruise control can all raise the value of a vehicle.4 Other items shoppers tend to favor include factory-installed sunroofs, leather upholstery, and premium wheels.5
About ClearCar
Accuracy and fairness are crucial when it comes to the car buying experience. Today’s car shoppers can take comfort in the fact that dealerships now employ a variety of tools and techniques to ensure accurate pricing and transparency when it comes to trade-ins. From utilizing trade-in software to employing thorough visual inspections, dealerships can create seamless experiences for their customers. Schedule a ClearCar demo here.
Sources:
- Hagerty (Jan 27, 2022). Factors That Can Affect Used Car Trade In Value. Capital One. June 27, 2024,https://www.capitalone.com/cars/learn/managing-your-money-wisely/factors-that-can-affect-used-car-tradein-value/1224
- How Much Is My Car Worth? 5 Factors That Determine Car Trade-In Value. Dent Wizard. June 27, 2024, https://www.dentwizard.com/selling-a-car-determine-car-trade-in-value.aspx
- 10 Vital Elements That Influence Your Car’s Resale Value. Mike Patton Ford. June 28, 2024, https://www.mikepattonford.com/blogs/4180/10-vital-elements-that-influence-your-cars-resale-value
- How Car Valuation Works: 5 Key Factors That Affect Your Car’s Resale Value. Ray Catena of Freehold. June 28, 2024, https://www.raycatenafreehold.com/how-car-valuation-works-5-key-factors-that-affect-your-cars-resale-value
- (July 28, 2022) Factors that Determine Car Trade-In Value. Classic Toyota of Tyler. June 27, 2024, https://www.classictoyotatyler.com/factors-that-determine-car-trade-in-value/
