I’ve been known to buy a used car from time to (all the) time. I especially like 5+ year old American made cars that depreciate in value a lot more quickly than Japanese, and German models (I’ve learned to stay away from everything Land Rover and Jaguar, the hard way). I also buy most of our cars from auctions, so hence, the motivation for this article, as it is the way I set my highest bid on auction cars.
We all like a good bargain, don’t we? So it goes without saying. You have to know the market value of a car, to get a fair or bargain price.
Most of have heard about “Blue Book” Value (i.e. Kelly Blue Book at http://www.kbb.com). There are two other resources you can use as well, such as the North American Dealer Association pricing guides (i.e. NADA http://www.nadaguides.com), but I like Car Guru’s pricing guide the most (i.e.https://www.cargurus.com/Cars/instantMarketValue.action). In all cases you put in make, model, mileage and options, and you’ll be given market value and trade in value. Let’s take an example, a 2006 Pontiac G6 GTP, with heated leather seats, 6 speed manual transmission, allow wheels and sunroof.
$6,851 Market Price – Based on 171 current used car listings
$4,239 Trade In Value
Kelly Blue Book (KBB) –
$6,631 Dealer Retail Price
$3,851 Private Party Sale
$7,500 Clean Retail
$4,600 Average Trade In Price
The reason I prefer Car Gurus is:
- Market Pricing – It’s value is based on the average of active car listings on it’s website.
- In The Middle Pricing – Note that the Market price is just above KBB, and below NADA.
- Ease of Use – To get the Car Guru price, it is significantly less clicks and selections, making it a quick market pricing tool.
- You Can Buy a Car At The Market Price – Given CarGuru’s average price is determined from the active listings on it’s site (note the 171 listings note), you can actually find cars at the prices shown. KBB and NADA are derived from numerous sources, such as auctions, and dealer sales records. Sort of an after the fact historic price model. CarGuru’s is effectively real time spot pricing.
How to Apply Market Pricing To Auctions
One way to apply CarGurus, is to find the lowest cost equivalent car (make, model, condition, mileage, and similar options) on Car Gurus. For example, the red GTP is selling for $5,999.
So, for me to get a bargain at an Auction, I need to pay considerably less than this. I target about a 25% to 40% discount from the spot price on CarGurus, after repairs are factored in. I came up with 25% – 40% (the exact number is 35%) below market price, by patiently sitting through a few auctions and noting sale prices and comparing to market prices.
So, in the case of the red 2006 Pontiac G6 GTP, I’d shoot for $3,600 – $4,500. I got my GTP from Manheim Auction (Go Tuesdays, for Public Auctions) for $2,200. I invested $490 to get it to pass inspection, for a net cost of $2,690. Note that mine went for a lower price, as it had (something I didn’t notice at the Auction, until too late) a torn bumper cover (replacement cost $500), which I haven’t invested in yet. Hopefully I get about 50K miles out of this car. If I don’t, I won’t lose too much sleep over it.
I hope you find this information useful. We have five drivers in the family, and I sleep a little more soundly at night knowing the minor bumps and scrapes our cars seem to get in the parking lot are not inflicted on a new car. Let me know if you end up using this info.