Having bought and sold (or traded) a couple of cars recently, I wanted to share some insight on determining the value of a used car. As it turns out, there are multiple sources for this info, including both Edmunds and the Kelley Blue Book (KBB).
But guess what? These sources often give divergent answers, with KBB values typically being significantly higher than those provided by Edmunds. So which is right? How do you know how much your car is worth?
Since KBB typically gives higher values than Edmunds, the answer should be clear: KBB is better if you’re selling, and Edmunds is better if you’re buying.
Just kidding. Mostly. The truth is that used car values can be difficult to accurately quantify and no tool will do a perfect job. There’s just too much variation in vehicle condition, the owner’s skewed perception of their vehicle’s condition, local demand, etc.
In the end, a car is worth what someone will pay for it. But still… You need a list price as a jumping off point. Aim high and nobody will come to look at your car. Aim too low and you’ll wind up selling it for much less than you could have gotten for it.
This is where Edmunds and KBB come in… They give you a baseline for trade-in (and retail) values as well as market values when selling to (or buying from) a private party.
While most online appraisal tools include a geographic correction based on your zip code, I’m not convinced that these effectively zero out the geographic variation in car values. Thus, you should also check the newspaper or Craigslist to get a better feel for you local market.
The same goes for vehicle condition. Edmunds will ask if your car is damaged, rough, average, clean, or in outstanding condition. Likewise, KBB will ask if it’s fair, good, very good, or excellent. These determinations have a major effect on the numbers and, while both sites provide some guidelines, but beauty is often in the eye of the beholder.
Okay, back to the question at hand… My own personal experience has been that values provided by Edmunds are much closer to reality than those provided by KBB. In fact, I’ve found that Kelley Blue Book values are often significantly inflated. In other words, they’re nice to think about (if you’re selling) but don’t hold your breath.
A third source is the National Automobile Dealers Association (NADA) which is arguably more relevant than either Edmunds or KBB. In my experience, both NADA and Edmunds give similar values which, again, are more reflective of reality than those provided by KBB.
P.S. When talking about Blue Book values, it’s “Kelley” (with an ‘e’) not “Kelly”.