“I needed to value my car,” said Phyllis Hellwig. “So I did what most people do. I went online, logged onto Google and started searching. I typed in ‘KBB,’ ‘Kelly Blue Book,’ ‘Kelley Blue Book used cars’ and ‘KBB vs NADA.’”
Like many Americans, Hellwig has kept her current car longer than she had expected. When she bought her luxury sedan, she anticipated keeping it for about five years. That was a decade ago. Now, she wants to sell it and get a new car, and she’s obviously considering using the craigslist cars listing.
This is happening all around the country. Americans are keeping their cars longer than ever before, and the average age of a car still on the road is approaching 13 years old. Currently, there’s a growing gap between the prices of new and used cars, and according to the Wall Street Journal, used-car values have increased in recent years.
More consumers are shopping for and buying used and pre-owned vehicles, while many are only interested in learning how to find off-lease cars only. According to the Wall Street Journal, “Used-car buyers are finding a growing selection of low-mileage vehicles that are only a few years old.”
But like many consumers in Hellwig’s situation, determining the value of their current automobiles seems complicated. Looking for answers, they’ve checked car prices online at Kelley Blue Book (KBB), NADA, Edmunds, Autotrader and other trusted resources that address car values. But many questions remain, including:
- What’s my car worth?
- How do I calculate the book value for my car?
- What is the KBB price for my car?
- Where does KBB get data for my car?
- Why is KBB and NADA different?
- What affects the value of my car (e.g., engine, cosmetic etc.)?
To simplify the process, we’ve put together this guide on how to use Kelley Blue Book (KBB) and how to understand the value of your current car as well as the key drivers of car value.
The easiest way to learn the approximate value of a used car that you intend to sell or purchase is relatively easy. There are price calculators on kbb.com and other auto pricing websites that will ask you a few questions about the vehicle and then determine its value. People often check kbb vs nada.
However, typing “value my car” into a Google search may not get you one simple price. Instead, you’re going to encounter several different terms and numbers when establishing the value of used car or pre-owned, which can be confusing. Here’s a short list of those important terms and their definitions that you’re going to see on websites like Kelley Blue Book (KBB), NADA and others.
- MSRP: These letters stand for Manufacturers Suggested Retail Price. It’s also known as a car’s Sticker Price. It’s simply the price auto manufacturers like Chevrolet, Toyota or Mercedes-Benz, suggest the car dealer selling their products charge for a new car. Used cars do not have an MSRP. New car dealers, however, are independent businesses so they can price the cars and sell the cars for any amount they want. If the vehicle is in high demand it’s possible the dealer will try to sell the car, SUV or pickup truck for an amount higher than the MSRP. This is unusual, however. Most new vehicles are sold for less than MSRP, as consumers and dealers expect to haggle the final price below the MSRP.
- Invoice Price: Basically Invoice Price is what the dealer paid the manufacturer for a car, however, with manufacturer rebates and incentives the priceis usually not the dealer’s final cost. Any price paid to the dealer above invoice price is profit for the dealer. Invoice Price is sometimes referred to as dealer cost.
- Transaction Price: This is the total selling price of any new or used car, including the destination fee and other charges. Tax, however, is not included. This is what you’ve agreed to pay for the vehicle. The average transaction price for new cars and trucks is now at an all-time high at just under $36,000, and that increase in new car prices had driven demand for used cars and off-lease vehicles.
- Wholesale Price: This is what the dealership paid the previous owner of the vehicle for the used or pre-owned car, truck or SUV (plus any transportation, reconditioning and auction fees). If the dealership sells the vehicle for less than the wholesale price, it loses money on the deal. Every dollar you pay the dealership above the wholesale price for the used or pre-owned vehicle is profit.
- Trade-in Value: Also known as trade-in price, this is the amount of money a dealer offers you for your used car or truck. It’s usually less than you may be able to sell the vehicle for on the open used-car market through a private sale, which is when you sell the vehicle to an individual rather than a dealer. The agreed upon trade-in value is the same as the vehicle’s wholesale price.
- Blue Book® Value: Often referred to as the “book value,” this phrase usually refers to Kelley Blue Book (KBB). Kelley Blue Book (KBB) has been providing new and used-car valuation expertise for more than 90 years.
Today, there are many such guides, including the Black Book, NADA Price Guide and others. These companies also put those used car prices online, where you can find dealer retail prices, private-party prices and trade-in prices on almost any used car. Car dealers often mention the “Blue Book Value” to establish the trade-in value of a used car or asking price of used cars on their lots. You probably want to keep this in mind if you’re considering off lease only cars.
The easiest way to establish the book value for your used vehicles is to log on to one of the websites mentioned above, including kbb.com and nada.com, and use a vehicle calculator. It will ask you a few important questions about the vehicle and then calculate the price or book value of the used car.
Here are six easy steps to determining your Kelley Blue Book Value.
- When you log onto kbb.com, at the top of the website’s homepage is a large green button labeled, “My Car’s Value.” Click on that button and it will take you to a page that asks a few questions about your car, including the year it was manufactured, the make or brand (Chevy, Toyota, Mercedes, etc.), model (Tahoe, Camry, C300, etc.) and current mileage. This is easy, as Kelley Blue Book (KBB) supplies drop-down menus with the most common choices.
- Once you’ve completed the information, click on the “Next” button and the website will ask you for your zip code to establish your location. This is common as the values of used cars can vary from town to town or from state to state. Typing in your zip will assure an accurate value for your vehicle.
- After that, kbb.com will ask you for the “style” of the car, SUV or truck, which may include a trim level (LX, EX, etc.) and possibly engine size (2.0-liters, 3.0-liters, etc.). Again, Kelley Blue Book (KBB) supplies you with the most common answers, so it’s hard to make a mistake.
- After that, you can add your car’s optional equipment and Kelley Blue Book (KBB) will ask you for your car’s color and condition. Most people think their car is in better condition than it really it. It’s best to be honest about the condition of your vehicle to get a proper valuation. Most cars are in “good” condition according to kbb.com.
- Here come the prices. For example, according to kbb.com, a 2011 Audi Q5, which has been driven 54,000 miles and is estimated to be in “very good” condition, has a trade in value of $14,569. However, Kelley Blue Book’s easily understood pricing graphic also points out that the range in my area is $13,244 to $15,893.
- On the upper right of the page is another button labeled “Private Party Value,” which estimates the price the owner can get for the car by spending the time and effort to sell it to another individual instead of trading it in to a dealer. These prices are almost always higher — and that’s true for the Audi Kbb.com says it has a private party value of $15,984 and a price range of $14,514 to $17,463.
Kbb.com also offers other helpful calculators, including a loan payoff calculator, as well as calculators for auto loans, car insurance and the 5-Year Cost to Own expense on most vehicles, which includes fuel, maintenance and other ownership expenses.
Kelley Blue Book (KBB) and most other car websites also offer listings of dealer inventory and pricing specials, car reviews, certified used-car listings and monthly payment calculators and other features to help you finance a vehicle.
Kelley Blue Book (KBB) will offer you two different values on your car, Private Party Value and Trade-in Value. The Private Party Value is a fair price for your car when you’re selling it to an individual instead of a dealer. The Kelley Blue Book Trade-In Range is what a consumer can expect to receive for their car on that particular week when selling it to a dealer.
Any price or price range supplied to you by Kelley Blue Book (KBB) or any other online pricing calculator, including those from NADA and Edmunds, is an estimate of your car’s value. It’s a guideline. A suggestion. This is why Kelley Blue Book (KBB) always supplies you with a price range in addition to its estimated price of your vehicle.
Remember, the trade-in value of your car is always going to be lower than the private party sale value. This is because the dealer paying you for the trade-in will then re-price and then resell the car to someone else for that higher value, creating the dealer’s profit less any costs for reconditioning, smog and safety.
Despite this, many people trade in a vehicle to save time and effort. For most consumers, it’s just easier to trade in your used car when buying a new one instead of learning how sell a used car online and placing classified ads for the vehicle on craigslist and other websites.
Once you have the prices for your vehicle, you can quickly test that information in the real world. Visit a local dealer with your used car and ask for a trade-in value on your vehicle.
If there’s a Carmax in your area, you can arrive unannounced and get an offer on your vehicle painlessly and with no obligation in about 30 minutes. The offer is good for seven days — whether you buy another car or not.
If you’ve decided to sell your used car on your own looking for the higher private party price, take a couple of weeks and test the market in your area. Place a couple of ads with the Blue Book Value and put it out there on social media. See if there’s any response. Keep in mind that any used-car buyer will expect the ability to haggle on the price a bit.
Many consumers assume Kelley Blue Book (KBB) and its website kbb.com are in the business of selling cars, but that’s not true. Kelley Blue Book (KBB) is in the data business, and the kbb.com pricing tools reflect that data gathered, which includes actual dealer sales transactions and car auction prices. The data is then adjusted for seasonality and market trends as well as your geographic region, and the pricing information is updated weekly.
Many of kbb.com’s other features, including its reviews, dealer inventory, dealer pricing specials, certified used car and pre-owned listings and monthly payment and finance calculators are also updated regularly. Some are even updated daily to keep the information fresh.
Kelley Blue Book (KBB) works with many car dealers and used car auctions around the country that supply the company with their latest used car sales. The information includes the vehicle’s specs, optional equipment, color and final sales price.
Much like Google and Facebook, Kelley Blue Book (KBB) gathers that data and then uses a unique algorithm to sort and organize the information, filtering it down until it is useful to you. That’s how Google offers you the best results for your search inquiry on any given topic and it’s how kbb.com and other online automotive pricing services like NADA (National Automobile Dealers Association) calculate the value of your used car. Kelley Blue Book (KBB) also has automotive analysts that are experts in the market and adjust the algorithm.
Although many of the online automotive pricing websites use similar data to calculate the value of your used car, the price will vary from website to website. This is the result of each using a different algorithm as well as unique methods for sorting that data.
The value of any used car or truck is primarily determined by its condition and mileage, however, the optional equipment on a vehicle also plays a factor, as well as its color and geographical location.
- Mileage: The lower the mileage on a vehicle the more valuable it is. But condition goes well beyond the car’s odometer reading. And condition is subjective, which is why used car values are not an exact science. Condition is a judgement on the part of both the seller and the buyer, and sometimes the two parties see the vehicle differently.
- Condition: Any used car will show some wear and tear as its gathers minor scrapes and stone chips in the paint and other minor imperfections over the years of use. But some cars lead harder lives and their conditions show it.
Even cars with low miles can have rust, torn upholstery, dents, a history of accident damage, broken air conditioning and other non-functioning features. If that’s the case, the vehicle is less desirable than a similar example in better condition and the damage will negatively affect the car’s value.
- Modifications: Aftermarket wheels, body kits, custom paint, dark window tint and other personalized changes can make a vehicle worth less money as they limit the appeal of a vehicle for a greater number of buyers. This is also true of cars with manual transmissions. Cars with automatic transmission are usually worth more.
- Paint Color: Automakers always offer the basics that never go out of style, including black, white and red. But opt for that trendy new color and it may adversely affect the value of the car a few years down the road.
- Vehicle Location: Some cars are just more popular in certain, towns, cities, states or regions. Mid-sized family sedans are universally popular, but some brands and models are in higher demand in certain regions.
Also, sports cars are usually more popular in warmer states and along the coasts; convertibles are in higher demand during the summer. Buyers in colder snowy areas like the Midwest and northeast like four-wheel-drive trucks and SUVs.
The car value calculators on most car pricing services like Kelley Blue Book (KBB), NADA and others take this into account when you ask for it to “value my car.”
Hopefully, this information has helped you better understand the processes, the players and the tools available to you while establishing the value of your car. Now that you know how it all works, it should be an easy and stress-free experience.