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Q: What is Car Value?

December 17, 2013 12:53 PM

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Car value refers to the market value of a new or used vehicle. The value of a new vehicle typically declines immediately following purchase. The value will then continue to decline annually based on a number of factors. This is known as depreciation. When a new vehicle is offered for sale, car dealerships are required to include the Monroney "window sticker" which includes information about the car's standard equipment, options, fuel economy and crashworthiness, as well as the manufacturer's suggested retail price (MSRP). The MSRP does not represent the amount paid for a vehicle by the dealership. The amount the dealership pays the manufacturer for the vehicle is the invoice price. The invoice price of the vehicle may not always represent the amount paid by the dealer due to the fact manufacturers sometimes provide holdbacks or incentives to encourage the sale of specific vehicles.

Used vehicles do not have an MSRP because the vehicle's value changes once it has been sold. You can locate the original price of the vehicle by contacting the dealership or through online research. There are also many companies that provide estimates regarding what is considered a fair price for a used vehicle in various conditions. The used-car market emerged soon after the first mass-production of vehicles. The Kelley Blue Book, sometimes known simply as the Blue Book, has offered information regarding used-car value to consumers since 1926. This guide offers estimates regarding the value of practically any used vehicle. The Blue Book Valueof a vehicle came about because the guide is published with a blue cover.

Car value can be affected by a number of factors, even vehicle color. Vehicles in standard colors, such as white, silver, or black, typically remain more popular years after their initial purchase date. Trendier colored vehicles are less likely to retain their value as well in the future. Mileage is another factor that can affect the depreciation of a vehicle's value. Lower mileage can indicate less wear and tear on the transmission and engine and such, so buyers often look for used vehicles that have fewer miles on them. As a result, lower-mileage vehicles typically have higher values. Brand name can also affect car depreciation. If a particular model or make is known to have problems, that make or model will depreciate more than a vehicle with a stronger reputation. The initial cost of the vehicle when it is purchased new will also affect its resale value. Lower-priced vehicles are often more popular with larger pools of consumers. Consequently, the value of a lower-priced vehicle will decrease by a smaller percentage because of a larger consumer demand.

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