A car is a major investment, even one that is used. Thousands of dollars are on the line, and there is nothing worse than overpaying for a car. Many buyers walk into negotiations unprepared, and wind up paying far more than the fair market value for a car. That's why it's so important to determine what would be considered a fair price whenever you get set to make such a huge investment.
Instructions
1. Use the Kelley Blue Book or KBB.com to determine the fair market value of a car (see Resources below). The Blue book has been used for decades to help buyers determine what prices are accurate for an automobile, whether they are new or used.
2. Look up the make and model of the car you're interested in. In the Kelley Blue Book, for example, cars are listed by manufacturer first (Ford, for example), followed by the model. The year of a car is also listed, as is whether the price shown is for a new or a used version.
3. Determine the fair market value of your own car by completing the online form at either website. You'll need to disclose information about its mileage, as well as its physical condition, including any major repairs that have been made.
4. Expect the trade-in value of your car to be different from it's fair market value. The dealership will want to profit from reselling your used car, and will thus likely offer a lower rate for the trade.
5. Use Edmunds.com to get the fair market and true market value of any car you're looking for (see Resources below). Edmunds.com offers an extensive database of cars that is constantly updated, giving you detailed information you can count on when you enter into negotiations with a dealership or even a private buyer/seller.
Tips Warnings
Subscribe to a car price guide. This is a great idea whether you are just buying one car or want to make several transactions in the next year. Subscription based services like those offered by the National Automobile Dealer's Association (NADA) enable you to get up to date pricing on a regular basis.
Understand that even if you determine the fair market value of a car, the price may be higher or lower depending on demand. If you're looking for a car that's in short supply (like some hybrids) then expect dealers and private owners to ask for a higher price than they would for cars that are more prevalent in the market.
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