The used car market is a fair weather thing. It fluctuates based on any number of factors whether real (or in some cases imagined) just like any other market. After a booming market, it seems that used car prices may start to dip soon, according to CNBC. That’s not a bad thing, because according to NADA executive analyst, Jonathan Banks, it’s because there is an increase in the supply of used cars, rather than a drop in the demand for them. This is good news whether you are a buyer or a seller but there are a few things that will always affect the value of your used car. We’ve put together a list of the top three things that affect your used car value and what they mean to you, no matter what side of the negotiating table you are on.
According to Edmunds.com, every car has mileage milestones—think of them as big car birthdays. These are important distances at which major services are due, or should have been done—or points at which major warranties expire and they are crucial in determining a car’s value. The first inflection point comes at 30,000-40,000 miles. Most bumper-to-bumper warranties expire somewhere in that range and it’s the point when most cars are returned to the dealer. This range is also when the first major service visit occurs. That means you are looking at more than just a simple tire rotation and oil and fluid change—you’re talking about new tires and brake pads—items that can’t be ignored. If your car is approaching this point you may want to try and sell your car before that happens and if you are looking at buying a new-to-you car, you probably should check to see that the maintenance for a car with 36,000 miles or more has been done.
The second turning point comes at 60,000-70,000 miles, according to Edmunds. This is the point when the second major service will be needed. Timing belts, tires and brakes are definitely on the replace list. At 100,000 miles, the third inflection point, there is a significant drop in perception of value of a used car. Even though modern cars are really just reaching the prime of their life due to better parts and engineering, at the 100k point, the market simply thinks that a car with 100,000 miles on it is soon to be headed for the junkyard. Above and beyond 100k, cars get the same services as the 30k and 60k milestones, just be aware that sometimes parts can become increasingly hard to find as a car gets up in age.
If you are a seller looking to fairly price your used car, you know how appraisers at car dealer lots can nickel and dime you. A tiny dent or ding is cause, in their minds, to take hundreds if not thousands of dollars off the “value of the car.” The National Auto Auction Association has 5 levels of grade for a used car. Grade 5 is the highest—and includes only minor defects in panel surfaces that will require no repainting or body work and no missing or damaged parts (say like a trim piece or door molding). Most vehicles on this scale will fall into Grade 3 which NAAA describes as “normal wear and tear including parking lot dings, small scratches, chips and minor broken parts.” Kelley Blue Book uses four categories of grading that ranges from Excellent to Poor—and all include some measure of exterior and interior damage. Excellent condition according to KBB means that the vehicle has had no bodywork, needs no reconditioning or paint and is free of rust. Most vehicles will fall into the Good, or Fair level.
As both a buyer and a seller its crucial to know where the car you are selling or buying falls—and what scale is being used. Rust either inside or out, particularly in the wheel wells, base of the doors and window trim is generally something that you want to steer clear of completely because it can indicate a deeper problem that could emerge down the road. Rust is also particularly worrisome if its on a car in places that get snow. Also you want to be sure that the interior of the car you are selling or buying is free of any strong odors. Often times odors can be tough to get rid of or indicate other issues like flooding or leaks. In addition, seats and interior trim pieces shouldn’t be too beaten up—those with beat up interiors wont sell for as much as cars with clean interiors without seat tears or rips.
This kind of goes without saying, but if you are buying or selling a car—you’re likely doing so because you need transportation of some sort. If a car doesn’t run, then it really defeats the whole purpose of the exercise.
That being said, the mechanical condition of your used car can have a big impact on price. If a car is running rough or sputtering smoke, it will likely have a much lower value than a car that is running smoothly and quietly. If a car is leaking fluids of any kind, that’s also generally a bad sign, and something that is going to affect resale value. If you are selling (or buying) a used car, the best thing to look for is a record of scheduled maintenance that shows that the car was maintained properly throughout its lifecycle. This will bring value and peace of mind to the buyer, and serve the seller well.
No matter what side of the table you are on, it pays to take care of your used car and maintain your investment. Focus on these key three things that impact resale and you can find a good deal.
Digital media content producer/consultant & former CNN senior producer, now running CN'TRL : Cars, Tech, Real Estate & Luxury.