Online Car Pricing Guides that can help you figure out how much your car is worth

Trade-in, Private Party, Dealer Retail Price

We are getting close to figuring out how much your car is worth, but you may have noticed that most of the online pricing guides have three different options for figuring out how much your car is worth:

(1) Trade-in value, (2) Private party selling value, 3) dealer retail pricing. Which one should you use to determine how much your car is worth? Let’s dive into each of those three options and also explore Why is the trade-in value less than the private party value? Why is the private party value less than the dealer retail price?

Trade-in value

The Trade-in value is based on how much, on average, similar vehicles have recently sold for at auto auctions in your area. There are two main reasons why the trade in value is significantly less than the Private Party and Dealer Retail price: Time and mechanical condition.

(1) When you trade a car in there is an easy button discount. Selling a car at private party and dealer retail prices usually requires a significant amount of time, energy and improvement costs that you get to skip when you trade your car in. Essentially, when you push the easy button and trade your car in you are passing on that time, energy, and improvement costs to someone else to deal with. To make dealing with that time, energy, and effort worth it, there is an easy button discount built in to trade in pricing. 

(2) The second reason trade-in value is less than the private party and dealer retail pricing is that it is assumed the car has needed repairs and maintenance. This is more of a psychological reason. It has become assumed that cars being traded in or sold at a dealer only auction have repairs or maintenance needed (because, honestly most of them do). To account for those assumed needed repairs and maintenance there is also a discount built into the trade in value to budget for what the car is going to need to be turnkey ready for a private buyer, or for a dealer to put up for sale.

If you are looking to sell your car quickly or sell your car as-is without investing time money into improvement costs, trade-in value should be the price your reference in determining how much your car is worth.

Private Party Value

Private Party value is how much a regular car owner should expect to be able to sell to another regular individual (no dealers or businesses involved). There are pros and cons buying and selling private party. 

Pros: Many prospective buyers will only buy from private sellers. Unfortunately, there are many sleazy dealers that have cut corners and severely overcharged for cars and associated upsells. Many people have developed a complete distrust of all dealers because of that and will only purchase a car from a private seller. In states like Utah a dealer also has to collect sales tax at the time of purchase which isn’t a fit for people who like to “fudge” the numbers when they report how much they paid for the car in order to lower the amount of taxes they pay. (note: this is considered tax evasion, and can result fines and penalties that are much more expensive than the amount of money you were attempting to avoid paying in sales tax)

Cons: On the seller side of the coin; the main drawback to selling your car private party is the time and energy needed to deal with it. Sometimes you will list your car for sale and sell it the same day. Most of the time, however, selling a car private party requires weeks or months of responding to dozens of inquiries, avoiding scammers and low ballers, no show test drive appointments, and making sure the paperwork and payment are all handled correctly.

If you are okay investing money into the improvement costs your car needs to make sure it is up-to-date on all of if it’s maintenance, has all of the cosmetics up to prospective buyer’s standards, and runs and drives awesome Private Party selling price will be a great reference point to help you figure out how much your car is worth.

Dealer Retail Price

Dealer Retail pricing is the most expensive of the three pricing categories the online pricing guides offer. Like private party sellers there is a significant time investment that has to be taken into consideration for dealers selling vehicles. There are two other main factors that contribute to why dealer retail values are usually higher than private party selling values:

(1) Not only do dealers have to spend the time and energy needed to sell the car at a higher than trade-in value price; they have a much greater responsibility to make sure the car is solid. Private sellers get a lot more leniency if there are a few dings and dents or if the car isn’t fully up to date on all of it’s maintenance

Auto dealers have a lot more responsibility to make sure the cars they sell are completely up-to-date on maintenance. That responsibility leads to additional costs in mechanics, inspections, and cosmetics compared to the standards private sellers are held to.

An auto dealer also has a lot more at stake than a private seller in making sure the cars they sell are safe and mechanically sound. If you buy a car from a private seller and two days later it blows up on you, the private seller doesn’t have online reviews or reputation to worry about and may leave you hanging out to dry. On the other hand– a worthwhile dealer has a lot at stake, and will often either provide a warranty to help protect the new owner if the car does happen to have issues after they buy it, or the dealer may cover the repair costs out of their own pockets, because ultimately it’s not just about the car they are selling you but about all of the cars they will sell months and years afterwards.

(2) The Second reason dealer pricing is typically higher than private party pricing is that it is a business. There are employees, rent, licenses, advertising, etc. that also have to be paid in order for the dealership to continue to operate.

Dealer pricing isn’t a very helpful measure in determining how much your car is worth if you are looking to sell your car yourself. However, it can be helpful to make sure you are getting an honest deal when it comes time to replace the car you are selling.