It is important for a car owner to be aware of the worth of his/her vehicle. This will be useful when one is looking to sell the vehicle or when buying a suitable insurance cover for it. Having an accurate valuation of the car ensures that you get the best price for the vehicle.
Most car buyers appreciate honesty and are more likely to buy a car when they think that they would save some money through the deal. So, it is crucial to price a used car in an accurate manner by identifying a fair price for that model - this can be done using a car valuation calculator facility available at multiple websites on the internet.
What Is Used Car Valuation?
Used car valuation essentially refers to the process of identifying an accurate price for a vehicle. It should be noted that every car depreciates with age. In the realm of motor insurance, there are guidelines that specify the rate of depreciation of cars with age. This chart is used uniformly across the industry to set the Insured Declared Value (IDV) for the vehicle.
|Age of the car||Percentage depreciation for IDV calculation|
|Less than 6 months||5%|
|More than 6 months but not above 1 year||15%|
|More than 1 year but not above 2 years||20%|
|More than 2 years but not above 3 years||30%|
|More than 3 years but not above 4 years||40%|
|More than 4 years but not above 5 years||50%|
The aforementioned values correspond to the rate of depreciation of the entire vehicle with age. The depreciation rate for car parts are evaluated in a different way.
The above table corresponds to the depreciation of a vehicle for the purpose of identifying its IDV. When you are looking to sell your vehicle, it is important that you identify the actual value of the car by approaching a website that has an in-built car valuation facility. This calculator tool will provide you a more accurate value.
How Does Used Car Valuation Impact The Insurance Of The Vehicle?
One thing to be noted is that pricing a car in an accurate manner takes some practise. If you underprice the vehicle, there is a chance that you will lose money when you sell it. You will also receive a lower claim payout under your insurance policy (as the IDV will be lower) for a total loss event such as car theft.
If you overprice the car, you may not be able to find buyers when you sell the vehicle. Another downside of overpricing is the fact that you will be required to pay a higher premium for its insurance. But this will not guarantee you a higher claim payout in a total loss scenario. So, find a balance between the age of the car and its other characteristics and perform a valuation that provides you a realistic price.
Used Car Valuation Calculator:
The used car valuation calculator facility is available at several leading websites. This tool enables you to set a price for your car that is close to its real market value at any point of time. The tool basically analyses the car’s age, general condition, and mileage and gives you an instant valuation. The calculator facility is characterised by features such as ease of use and accuracy.
The user will have to enter the registration number of the vehicle, the year of manufacture, the make and model of the car, and the city it was registered in. In order to improve the accuracy of the valuation, the user can enter the mileage and general condition of the vehicle. The output of the tool will reveal the following details:
- The amount that you will receive/pay when selling/buying the vehicle to/from an individual.
- The value that you should aim for when trading your vehicle at a dealership.
- Some of the used car valuation tools available online enable you to get the dealer price that you will be paying in case you were buying the vehicle without any part-exchanges.
You may also consider browsing through used car portals to understand the seasonal fluctuations in car prices. Limited edition car models are a very tempting proposition, but they have a low second-hand value. The latest models of cars can also command very high costs in comparison to their resale values.
Factors That Affect Used Car Valuation In 2018:
The latest models of the used car valuation calculators work on the basis of the following factors:
- Physical condition - The interiors and exteriors of the car should be inspected along with dents, rusts, paint peel offs, and body damages.
- Service history - The service history of the vehicle should be checked. One should also check whether the car was serviced at authorised workshops.
- Mileage - The mileage of the vehicle should be checked. It is undesirable for a car to be driven for less than 200 km each month.
- History of accidents - The No Claim Bonus accumulation and accident history of the car should be evaluated.
- Registration Certificate (RC) details - One should check whether the car has changed hands multiple times. Bank hypothecation should also be evaluated. The imprint of car chassis number should be checked as well.
- Driveability - The suspension of the car should be inspected. One should also check if there are any noises from inside, speed lag, or any other driveability issues.
- Car functions - Other things that need to be checked include the power window, AC, central lock, lights, steering, door locks, and indicators.
- Production model - If the vehicle model is discontinued, then it is quite likely that the spare parts will be more expensive. Cars from specific manufacturers also have costlier spare parts.
- How can I improve the valuation price of my vehicle?
- Is the value of a new car equal to 100% of its invoice price?
- What is the worth of my car to a dealer?
- What is the best place to sell my used car?
- How does the used car valuation calculator help sellers and buyers?
In order to get a good valuation price, it is important to clean the car well. The interiors and exteriors should be in the best condition. You can consider a paint touch up, cleaning of floor carpets, adding perfume, and dent removal. This way you can bring up the valuation of your car by a significant amount. The tyre condition also has a bearing on the valuation price. If the tyres of the vehicle have been replaced in the last two years, you should have a bill that can serve as proof for this. If the vehicle servicing was always on time and done regularly, then you can hike the price of the car at the time of sale. Also, if the drive belts, battery, and other car parts that incur wear and tear have been replaced recently, this should be highlighted.
As far as car insurance is concerned, the value of a car that is less than 6 months old is 95% of its ex-showroom price. When looking to sell such a car, the estimated valuation should be around this value.
The worth of your car to a dealer will depend on the specific dealership you approach. It will be useful to go to a dealership that specialises in your type of car, i.e., brand-specific cars, old cars, low mileage cars, etc. By approaching a specialised car dealer, there is a greater chance for the vehicle to be sold off from the showroom at a quicker pace. You should also inform the dealer that you are looking for a fair valuation of the car.
There are two options for selling a used car:
Option 1 - You are looking to sell off the car fast
In this scenario, it is best to approach an online portal that specialises in used cars.
Option 2 - You can wait for the best price on offer
If you have the luxury of time, then you can sell your vehicle privately through classified ad websites. You may even get a better deal on the sale this way.
The used car valuation calculator facility enables sellers price their vehicles in a fair manner. When a seller prices his/her car fairly, the buyer benefits from a product that is great value for money. The tool, effectively, creates transparency in the entire sale process. If the used car is being purchased through a loan, the tool can be useful for banks and NBFCs to get a fair pricing. It also helps insurers in determining the motor insurance premiums.
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