It can seem almost impossible to determine whether or not you are going to get a good deal on a used car. You could get exactly what you wanted, at a price you could afford, but does that mean that you got a good deal? Not necessarily. However, there are some specific criteria that can be applied to every used car to determine what a good deal is.
Used Car Prices: What is a Good Deal?
1. The Current Value
Before you even think about making an offer or bid on a car, it is essential that you know what the current value of the car is. Many people recommend that you check the Kelley Blue Book value, but in reality this is not the information that you want. The KBB show you the “estimated dealer asking price”. However, even the KBB states that the actual selling price may vary substantially from the KBB value. Almost no dealer will get their initial asking price for a used car, so the KBB value doesn’t actually tell you what price people are paying for it.
The best way to assess the current value is to turn the TMV or True Marker Value. This can be found using the Edmunds’ TMV Pricing. You can actually alter a variety of variables on their website including mileage, location, and features to determine the value of any car based upon your area.
2. The Importance of Local Value
Understanding the local value of a used car is essential to knowing if you are getting a good deal. Supply and demand will greatly affect the actual value of a vehicle, which is why local value is so important. Sometimes, by driving as little as an hour or two to a different location can save you thousands of dollars. For example, if you live in an area where 4 wheel drive is essential, then the demand will be higher, thus the price higher. By driving a few hours to a flatter area, 4 wheel drive may not be considered essential, thus a lower demand exists and the price will be lower.
3. Additional Costs
If purchase a great looking used car for $1000, then it may seem like a great deal. But what if it requires an additional $5000 in repairs over the next year? Not such a great deal. When determining used car prices, it is essential that you factor in additional expenses that are likely to occur in the future (at least a year into the future). Remember, in order to determine whether or not the price you paid for a used car is a good deal or not, it is important to compare your total costs with the total value of the car.
What is a good deal? Used car prices can be difficult to judge if you do not understand how to gauge the value of the deal. By assessing the current value (not current price) of the vehicle, factoring in the local value, and adding additional costs, you will be able to better assess whether or not you got a good deal on your used car price.
