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Q: What is Wholesale Value?

December 17, 2013 12:53 PM

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When you trade in your current vehicle for a new vehicle, the amount your trade-in is worth depends on the car's wholesale value. If you aren't sure how to figure out your vehicle's wholesale value, keep reading. This article will explain how wholesale value is calculated and what factors you need to consider.

The wholesale value of a vehicle is the value that a dealer would pay to purchase it from a car manufacturer. In the case of trade-in vehicles, the wholesale price might also be the price a dealer would pay to purchase the vehicle from a dealer auction. In any case, wholesale value is a measure of dealer cost.

There are several factors that can determine the wholesale value of a vehicle:

- The condition of the vehicle. Vehicles at dealer auctions are priced based on whether their condition is above average, average, or below average. If your vehicle is in particularly good condition, the wholesale price will be higher than if the vehicle is in average or poor shape.

- The age of the vehicle. Vehicles depreciate in value with increased age. This means that the older the vehicle is, the less it is worth even if it is in perfect condition.

- The listed Kelley Blue Books price for the vehicle. Kelley Blue Books offers estimations of value for vehicles based on their make and model, condition, and age. Wholesale prices are often close to these estimated prices.

It's important to understand the factors that can influence the wholesale price of the vehicle because it is often the price that the dealer offers as a trade-in. Dealer prices may be slightly lower than the wholesale value of the vehicle, however, because the dealer considers his or her risk. In order to cover expenses in the event that there's a hidden problem with the vehicle, dealers often initially offer a little less than the wholesale price for trade-ins.

Understanding how wholesale prices are determined and having an awareness of the probable wholesale value of your vehicle puts you in a better position to negotiate. If you know what the wholesale value of your vehicle is, you can confidently tell the dealer that you think his or her offer is too low and refuse to accept it.

Wholesale value is not always a complicated concept, but determining the wholesale value can become complicated because of the factors involved. In general, if your car is newer or in good condition, the wholesale value will be higher than if it is older or in poor condition. Find out what the wholesale value of your vehicle is before you approach the dealer about a trade-in so that you can get the fairest deal possible.

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