When it comes to the resale value of a car, truck, minivan or SUV, people tend to focus on only two factors — the age of the vehicle and its mileage. In reality though, there are many other things that can impact the value of a used car. The overall condition of the vehicle, for sure, will impact the price. But there are plenty of things that people likely aren’t aware of that can also impact a car’s resale value.
Many of these things are subtle, but they can raise or lower the price on a particular car. Being aware of all the elements that affect a car’s value will help to ensure that you get top dollar for any vehicle that you plan to sell. Here are 10 things that impact a car’s resale value.
10. Accessories and Upgrades
A car is not like a house. Adding accessories and shelling out money for upgrades is not going to increase the value of a car the same way it raises the value of a house. You can spend $2,000 on an advanced stereo system if you want. However, you should not expect to recover that money when you sell the vehicle. While a new deck and a swimming pool in the backyard may raise the value of a house, most of the upgrades in cars and other vehicles have no real bearing on the resale value.
This goes for things like sunroofs, leather seats, and satellite radio. If you paid for these upgrades thinking they would help your vehicle retain value, you are likely in for a rude awakening. Only get upgrades and accessories because you want them and will enjoy them. Not because you consider them a financial investment that will pay you a return at resale time.
It may sound a bit strange, but one of the things that has been shown to impact a car’s resale value is its exterior color. This is especially true depending on where people live. In a hot state such as Arizona, for example, cars that are black are less desirable because they attract the sun and tend to be hotter than lighter colored vehicles. The bestselling used cars in Arizona are white.
This might seem like a weird thing for people to consider when purchasing a vehicle. However, paying attention to the color when buying a vehicle can reap dividends when you eventually sell it. Chalk “color” up to a little thing that can make a big impact on a car’s value. It’s what salesmen call “consumer psychology,” and it is real.
8. Time of Year
Consider the time of year when selling your vehicle. It should come as no surprise that convertibles sell better (and for more money) in the summer. Conversely, SUVs sell better and at higher prices in the winter. They say timing is everything, and this extends to when you choose to put a car up for sale.
If you want to create demand for your car and ensure plenty of interest from potential buyers, then wait until the time is right before putting it on the market. Holding off in May and waiting until June to sell a convertible can make a big difference. The summer will also enable people to test drive a convertible with the top down and ensure they get the most enjoyment from the experience. That can lead prospective buyers to paying maximum dollars.
7. Style Changes
If you have an older model SUV and the manufacturer comes out with a new version of the same vehicle, complete with a new body style, it could impact the demand for your older model. Naturally, people will want to get their hands on the new version of the SUV. In comparison with the new version, your SUV will look old and outdated. That results in people not willing to shell out to own it.
Do yourself a favor and pay attention to reports by automotive manufacturers about their plans to revamp particular brands and models. If you hear that next year’s model of your vehicle will look completely different and have a new style, then beware. You may want to list your vehicle for sale before the new version of the same model hits dealer showrooms. Staying ahead of the curve in this way can help ensure that you get a fair price when selling a vehicle.
Rebates and incentives do not only impact new car sales. They can also have an effect on automotive resales. For example, if there’s a significant rebate on a 2019 model truck, then the 2016 used model might not sell as well. The attraction of buying new can actually drive down used car prices.
For this reason, it is important to pay attention to information concerning rebates and other financial incentives. This information can be obtained from a source such as the NADA Guides website, which tracks rebates and incentives on most makes and models. This is one of the best way to learn if a new model vehicle is more of a deal than an older model that has rebates and incentives attached to it.
While accessories and upgrades tend to have little bearing on a vehicle’s resale value, the engine under the hood certainly does. Studies show that one of the things motorists care most about when buying a second-hand vehicle is the engine. This is because it impacts the overall functionality and reliability of a vehicle. If the engine doesn’t work well, it means costly repairs for the person who buys the vehicle. If the engine dies, buying that used car was a complete waste of money.
When people talk about a car being a “lemon,” they are usually referring to the engine being bad. Also, when it comes to certain types of vehicles such as pick-up trucks, buyers typically want a powerful engine. They will pay more for a V8 versus a V6 engine. This means that you should pay attention to what’s under the hood of a car you buy. Try to buy a vehicle from a manufacturer that has a reputation for reliable engines. If you’re going to spend money on any upgrade, boost the engine from a V6 to a V8.
Another psychological factor is the cleanliness of a vehicle that you are selling. Having a clean car, especially a clean interior, can impact how much money someone is willing to pay for it. The cleaner the car is, the more money you can charge. This not just because people like the inside of a car to be clean. It’s because a clean interior signals that a car has been well maintained. Buyers will believe the entire car is in good shape. Potential buyers will feel that the car you are selling is likely to be more reliable.
Again, it’s psychology at work. A filthy car telegraphs that a vehicle was not properly maintained and is probably in rough shape. Shoppers will naturally assume the car you’re selling is less reliable and more likely to breakdown on them. People can reap big financial rewards by taking time to properly clean a car before listing it for sale. Or go one step further and pay a couple hundred bucks to get it professionally detailed. You’ll make that money back when you sell it, and then some.
Very few people drive a manual transmission these days. In fact, most drivers do not even know how to work a clutch or manually shift gears. That is why nearly all vehicles sold today have automatic transmissions. For this reason, it wouldn’t really be advantageous to buck the trend and purchase a manual transmission car.
Same goes for all-wheel drive vehicles versus front-wheel and rear-wheel drive vehicles. Most vehicles are either front-wheel or rear-wheel drive only, and the majority of car owners could care less if a vehicle has all-wheel drive capability.
If you personally prefer all-wheel drive or a stick shift, that’s fine. Just don’t expect other people to be willing to pay extra to buy a vehicle with things they don’t really want or need. Stick with the standard drivetrain options on most vehicles and you’ll have an easier time selling your vehicle in a few years.
Avoiding accidents is not only important from a personal safety perspective. It’s also important to protect the value of your car. Any accident involving your vehicle, no matter how small, gives people an excuse to drive down the price. In North America, any and all accidents are reported as part of a vehicle’s history. They must be reported by law in most jurisdictions.
Accidents follow a vehicle around like a criminal record. It doesn’t matter if the accident was a minor fender bender or a total wreck and repair. Anyone considering purchasing your used vehicle will have a reason to discount the price if they find out it has been in an accident. The information is easy to find, too, from services like Carfax or AutoCheck.
1. Supply and Demand
Ultimately, it’s supply and demand that will determine the value of any car. If you live in northern Wisconsin where it snows seven months of the year, then chances are there will be less demand for convertibles than in sunny southern California. The same goes for how popular and common a particular make and model of vehicle is.
If you own a limited edition truck, you will likely be able to charge more money for it than a common Honda Accord. Those can be spotted on every street corner in the country. It’s therefore important for people to know the market where they live and to do a bit of research before buying (or reselling) a car. As always, a little knowledge can go a long way towards the resale value of any type of vehicle.