Looking to buy a car? You’re not the only one. In fact, according to Kelley Blue Book (KBB), about 68 percent of Americans are currently planning to buy a car in the next three months. On top of that, car sales have been climbing steadily since the recession. This sudden uptick in interest has many car buyers wondering: What is the value of a car? And how will it be affected by inflation?
If you’re looking to buy a car, sooner than later, and you have a basic understanding of the industry and the different factors that affect its value, you’ll be able to determine if the price is fair or not. Your goal should be to find a car that meets your needs, has low maintenance costs, and is worth the price. To do that, you’ll need to understand the value of a car. So, let’s take a look at what you need to know about a car’s value, and how it will be affected by inflation.
Table of Contents
What affects the value of a car?
When you’re buying a new car, the value of the car is affected by many things, including but not limited to:
- The condition of the car. A better-quality used car is worth more than a car with minor damage. This is because a better-quality car will be in better condition and likely have less damage than a car with less quality.
- The year of the car. Newer cars are worth more than older cars. This is because of the rising costs of replacement parts, maintenance, and fuel.
- The car’s mileage. The higher the car’s mileage, the lower the car’s value. This is because the car is getting older, and replacement parts, maintenance, and fuel costs are going up.
- How much the car costs to maintain. Maintenance costs are going up year after year, meaning that the value of a car is going down.
- How much the car sells for. Of course, the more a car is worth, the less you’ll have to pay for it.
How to calculate the value of a car
If you’ve ever bought a car before, you’ve most likely sat in the dealership with the salesman and gone over the numbers. The process is pretty straightforward: you start with the car’s purchase price, and then add in the various costs that come with owning the car, such as gas, maintenance, and insurance. You then divide that amount by the number of miles that the car gets per year to come up with the estimated selling price.
This model isn’t perfect, but it’s a good place to start. At its most basic, we can calculate the value of a car by starting with the purchase price and adding in the purchase price plus all the costs associated with owning and operating the car.
What is the Kelley Blue Book (KBB)?
The Kelley Blue Book (KBB) is an industry guide that reports the average values of vehicles. It’s often used as a reference point when car sellers and buyers are comparing prices.
The Kelley Blue Book (KBB), which was founded in 1926, is a private association that publishes an annual guide to automotive market trends. It’s based in Allentown, Pennsylvania, and its values are used to set the values that dealers use for trade-in credit, as well as for advertising cars for sale.
How is the value of a car determined?
There are several factors that affect the value of a used car. These include things like the condition of the car, its age, and the cost of replacement parts.
Used Car Parts Condition: This is where the condition of the car plays a major role in the value of a car.
If the car is in good condition, it’s worth more than a car in poor condition. This is because a car in good condition is less likely to have major damage.
Car Age: This is the number of years that the car has been on the road. Old cars have less value than new cars.
New Car Parts Cost: Of course, used car parts cost less than new car parts. This will have an impact on the value of a car.
Factors that affect the value of a new car
- The condition of the car. A better-quality used car is worth more than a car with minor damage. This is because a better-quality car will be in better condition and likely have less damage than a car with less quality.
- The year of the car. Newer cars are worth more than older cars. This is because of the rising costs of replacement parts, maintenance, and fuel.
- How much the car costs to maintain. Maintenance costs are going up year after year, meaning that the value of a car is going down.
- How much the car sells for. Of course, the more a car is worth, the less you’ll have to pay for it.
Factors that affect the value of a used car
- The condition of the car. This is where you should start. This will play a major role in the value of a car.
- The year of the car. If possible, try to buy a car with the least amount of miles. This will increase the car’s value.
- The car’s mileage. The higher the car’s mileage, the lower its value.
- The car’s cost to maintain. Maintenance costs are going up year after year, meaning that the value of a car is going down.
- How much the car sells for. Of course, the more a car is worth, the less you’ll have to pay for it.
Bottom line
In the end, the value of a car depends on a variety of factors, including the condition of the car, the year of the car, the cost of maintaining the car, and how much the car sells for.
If you’re looking to buy a new or used car, make sure to do your research and understand what affects the value of each. You can also contact a few car dealers to get quotes from a better group of car sellers.
