Car value – the ultimate guide
Car value can be complicated to understand. As your main method of transportation, you might put a high price on your car just for the freedom it gives you. But does that match what a private or trade car buyer might be willing to pay for your motor? What is your car’s true value?
This ‘ultimate guide’ to car value will help you get a more accurate picture of the real market price of your car. Read on for car value enlightenment…
Knowing the trade value of your car can save you time and money. It’s useful for insurance purposes, when you’re trading it in or placing adverts to sell your car. And understanding what affects the price of a car will also mean you can avoid the worst depreciation pitfalls and problems.
A car is worth different amounts to different owners and buyers, which means car valuations vary from place to place. The important thing to remember is a car is only worth what somebody is willing to pay for it. This ultimate guide untangles everything you need to know…
The ultimate guide to car value
- What determines car value?
- Car value factors
- The market value of a car?
- Who buys and sells cars?
- Why do prices vary between car buyers?
- Which factors determine the market value of your car?
- Car value and depreciation
- How to maintain your car’s value?
- Car value check – where to get a car valuation?
- Online car value calculators
- Scrap value of cars
What determines car value?
Ultimately the two main factors deciding the value of your car will be supply and demand.
The most expensive car sold at auction is a unique Ferrari 250 GTO which raced at Le Mans and won the 1964 Tour de France car race. There’s a very small supply of race-winning 1960s Ferraris, and a large demand, which is why it sold for £52 million.
The supply of second-hand mass-market hatchbacks is much bigger. So although they might be a better choice for everyday driving than a Ferrari, their value is much lower.
Rare special editions can create a higher demand than supply (for example, the Lotus Cortina or Ford RS2000 Escorts), but it can still take decades for values to really increase.
But supply and demand set a broad value for the year, make and model of your particular car. A lot of other factors will change the final figure you can expect.
The factors taken into account for car values
So what else is taken into account when calculating the value of a car?
- Previous owners
- Documents and service history
- Fuel type
- Time of year
- Method of selling
It’s logical that an older car with higher mileage and in bad condition will be worth less. But some factors are less obvious or predictable. A car manufacturer with a good reputation for reliability will tend to hold their price better against depreciation.
But you’ll also find convertible sports cars sell for better prices in Spring and Summer. Or that selling a tuned, heavily modified car will result in a higher amount appreciated by fans on an enthusiasts forum compared to a trade-in price at your local car dealer.
Sometimes car valuations can even change almost overnight. For instance, the drop in value for diesel cars following the emissions scandal and anti-pollution charges.
You can sell a car legally with or without having the V5C registration document, but it’s not recommended and can lower the price being offered by both private and trade buyers as it raises suspicion.
The market value of a car
The economics of buying and selling cars is constantly evolving. Which is why businesses and services including Glass’s, HPI and CAP can make a lot of money supplying their automotive market data to car dealers and other related companies. But the core question for anyone buying or selling a car is how they can make the most money from any deal.
Who buys and sells cars?
There are a lot of options when it comes to selling your car:
- Selling to a private buyer
- Part exchange or selling to a car dealer
- Using an online car buying site
- Selling your car for scrap
Generally you’ll get more money by selling your car to a private buyer, whether you’re advertising via online classifieds (like Auto Trader, Gumtree or eBay), specialist forums or on a postcard in your local shop.
The difference can be up to 5-30% compared to the value you’ll get from a dealership, although this can vary widely. The trade-off is that you can usually part-exchange your vehicle quickly and easily, but a private sale can take weeks or months.
Online car buying services have grown rapidly as they offer a quick, no hassle way to sell your current car. It’s important, however, to compare the various offers via a comparison service like Motorway to ensure you’re getting a good price and that there are no hidden charges.
Finally, there may be a point that your car is worth less than the time and trouble to sell it. In which case you can still get some money back via a scrappage scheme, or selling it to a scrap dealer.
Why do prices vary between car buyers?
You’ll tend to get more money from your car by selling to a private buyer. The reason is that it’s being purchased for their own use, and might be something they really want or need.
A private car buyer is also less likely to have researched the market value, have access to industry price guides or be quite as diligent and tough on negotiating prices down.
A car buying service or dealer offering a part exchange aren’t often looking to keep the car to retail it themselves. Their aim is often to turn it around to a new buyer as quickly as possible, and make a profit in the process. So they may need to pay less for stock in order to earn a margin.
And dealing with large volumes of cars mean they are more likely to know common issues and market rates. They won’t be attached to your particular vehicle, so can walk away from negotiations more easily.
Scrap dealers tend to specialise in cars worth relatively little. But some will offer a free pick-up service, and cover the cost of it by offering less for your car.
Which factors determine the market value of your car?
Some aspects of car values are fairly easy to calculate. A car being sold for scrap will be worth more if it’s bigger and heavier, simply because there’s more metal to sell.
But the market value of a specific car is a combination of the 15 factors we’ve mentioned so far.
Age and depreciation will lower the price of any car until the point it becomes a recognised classic. High mileages will decrease the sales amount, but have less of an effect on brands with great reputations for reliability and longevity.
Location is a factor which varies widely. If you’re selling a desirable car, then you’re accessible to far more potential buyers in a city like London. But there will also be a lot more sellers potentially undercutting you with common makes and models.
A rural location will decrease your audience, but means less competition. And a seaside location can lower the sales price due to the greater risk of corrosion.
Car value and depreciation
Depreciation is the difference between what you paid for your car, and what it’s worth now if you sold it.
Any new car will drop in value the moment you drive it away from a dealer, because it’s immediately become a used example.
Depreciation hits hardest over the first few years. Towards a decade of ownership, values tend to level off.
Some brands and models of car are hit harder by depreciation than others. It’s well worth considering the future value when you’re buying a car and doing what you can to avoid bad depreciation.
There are even examples of identical cars sold with different manufacturer badges on them varying by thousands when it comes to depreciation over the first few years of ownership. So do take the time to research the topic!
How to maintain your car’s value?
There are a few quick and simple ways to retain as much value in your car as possible. Keeping your mileage down might not always be possible. But you can certainly keep it clean, and we have a guide to washing and waxing your car to help you do a good job.
Rather than spending money on modifying your car, it’s better to invest in maintain the service history and ensuring there are no preventable MOT faults. Find out how to sail through the process, and save money, in our MOT guide.
Car value check – where to get a car valuation?
There are two main options for valuations; online car valuation tools or visiting your local car dealerships. And there are advantages to doing both.
Visiting a dealership means someone actually looking over your car and noting any issues or defects in person. This can’t be achieved with online services, and means a more accurate valuation.
Dealers specialising in particular types of car or specific manufacturers will be likely to give you a better price, but both national and small local dealerships are also worth talking to.
If you’re buying a new car from a dealer, they may offer you a better price or part-exchange deal. But be careful that it isn’t simply swapped for a higher cost on your new car.
But what about online car valuations?
Online car value calculators
It’s quick, easy and usually free to get your car valued online. But it’s important to remember that the figures you receive will be estimates. The valuation services won’t have the full details of your car, or a chance to inspect it, before providing you with a sale price.
So it’s a good idea to use a few services and take an average for a more realistic figure. After analysing 4,000 valuations and sales, we’ve found that a car valued at more than £5,000 will typically sell for around 6% less. Older and lower value cars below £5,000 are also harder to value accurately online.
Reputable car valuation services include:
- Parkers – free car valuation by number plate, or selecting make, range and model based on a standard mileage (10,000 miles per year). You can then adjust the valuation for other mileages and optional extras by paying for a Parkers Premium Valuation, from £3.49. Results include the original price, franchised and independent dealers, good and poor condition private sales, and part exchange.
- Auto Trader – Registration and mileage based, in exchange for signing up for an Auto Trader account. Valuations are slightly skewed by private and dealer sales on the Auto Trader website, so tend to be higher than you would generally see.
- HPI Valuations – Reg plate based, offering retail, private, trade-in and forecourt prices. You’ll need to sign up for marketing emails to see the results. But as the company also provides the CAP-HPI dealer data, it should be relatively accurate. You can also get a full HPI Check with information for buyers and sellers. Find out more in our HPI Check Guide.
- AA Valuations – Along with a valuation, your car is listed for bidding by dealers. So if you receive a big you’re happy with, you can sell your car straight away.
- Motorway – Need a range of selling prices? Value your car with us and you’ll get an online valuation from a selection of reputable online car buying services and specialist dealers all in one place. You can quickly see which prices are worth pursuing with a full phone or in-person assessment and a final inspection. It’s a quick and efficient way to sell your car and sometimes you can get even more than your target price by choosing your best buyer.
Scrap value of cars
If your car is old and poor condition, it may be quicker to scrap it. It could also be a Category D (Now known as Category N) insurance write-off.
Although it might still be roadworthy, it will hold little value. If your car value is only £200, it makes more sense to pass it to a scrap dealer than try to sell it.
Alternatively, you can attempt to sell any worthwhile parts separately, or advertise it for ‘spares or repair’. You’ll get more than from a scrapyard, but it can be very time consuming.
Assuming there’s no manufacturer scrappage incentive scheme that applies to you, the best option is to use our own scrap buyer comparison service. Motorway will let you get multiple quotes quickly and easily to compare the best scrap and recycling prices.
It’s possible that the value of your car is so low that you need to speak to local scrap dealers. Our research into scrap dealers suggest that £60-£75 is a standard offer for any normal car without valuable extras.
Looking for more guides relating to car value?
Hopefully our ultimate guide to car value will help you get the best price for your current vehicle, and mean you can choose your next purchase wisely.
With car values sensitive to many wider forces regarding the transition to cleaner vehicles at the moment, these are many reasons to invest in a Euro 6 compliant car if you are thinking of upgrading your vehicle soon.
If you need more advice, then check out the wide range of specific guides we have available in all areas of buying, selling and owning a car.
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