How to Determine Your Car’s Trade-in Value
Written by DriveAxis.ca August 03, 2022
When it’s time to trade in your existing vehicle for a brand new one, it helps to know how much it’s worth. Doing so will not only help you get the best amount for your current vehicle, but it will also help you figure out how much you can afford to pay out for a brand new one.
Unfortunately, the process of figuring out a car’s trade-in value is a bit complicated, especially given the inherent differences between blue, black and red book values that are commonly used in Canada today. Luckily, this guide will help you understand trade-in values so that you can be better equipped to maximize your earnings, and reach a higher caliber of vehicle to purchase.
HOW DEALERSHIPS VALUATE CARS
It may be tempting to take your car to the nearest dealership and get a quick offer, but consumers should understand that this process almost always guarantees a net loss in terms of earnings. Car dealerships need to buy your car quickly, then turn around and re-sell it as fast as possible, while turning a profit.
Therefore, they’re far more likely to offer you bare minimum prices close to wholesale. Relying on dealerships to give you an accurate valuation for your vehicle isn’t always the best bet, given the business model.
UNDERSTANDING THE CANADIAN BLACK BOOK
There are three colour-titled books commonly used to valuate used vehicles, and the Black Book is by far the most common and comprehensive. Once a paid tool, the Black Book is now free for car owners to use in order to figure out their car’s worth. The Black Book tracks a number of criteria across the car buying spectrum - including provincial sales data - to update its database on a consistent routine basis.
One advantage of the Black Book is the ability for car owners to check the average dealership asking price of their vehicle after it has been purchased for resale. Armed with this knowledge, consumers have a much better idea of what their vehicle is actually worth.
UNDERSTANDING THE CANADIAN RED BOOK
Unlike the much broader and more comprehensive Black Book, the Canadian Red Book is a CARFAX tool commonly used by dealerships, insurance companies and appraisers to determine a car’s worth. Access to the Red Book requires a hefty fee of around $250 dollars, which essentially puts it out of reach for most consumers trying to maximize their profit margin when selling a vehicle.
However, CARFAX does offer an alternative free tool that is quite similar in approach to the Canadian Black Book. It’s a handy way of figuring out what your car is worth, even if it lacks a few details. One of the main advantages of the tool is the ability to request a CARFAX history report on your vehicle, which can show you different criteria that may affect the final asking price of your car.
UNDERSTANDING THE KELLEY BLUE BOOK
Along with the Canadian Black Book, the Kelley Blue Book is one of, if not the most well-known sources of information when it comes to car valuations. It offers all of the same criteria as the previous two tools, plus a few more, which can actually make the process of determining your vehicle’s worth a bit trickier. For that reason, it’s not as advantageous as the Canadian Black Book.
Another potential problem area for the Kelley Blue Book is the ability for consumers to rate the condition of their own vehicle when trying to determine its value. Most people would be tempted to list their car in better condition than it actually is, which could produce some unwanted surprises when the time comes to actually sell it.
SELLING PRIVATELY VS. A DEALER
Many who wish to sell their cars opt to do so privately, usually through an online listing. Keep in mind that while this process can maximize your earnings, it does require more attention to detail, paperwork and time than simply dropping it off at a dealership and collecting a check. For those who understand the process, or are willing to learn, a private sale can be incredibly beneficial. Just remember that time will need to be set aside for multiple meetings and test drives with interested buyers, not to mention the paperwork required to transfer ownership to another person.
Here at DriveAxis.ca, we’re intimately familiar with the process of buying and selling vehicles. If you’re in the market for an upgrade, but you aren’t sure how to sell your existing car, contact us today and we’ll help you work out the most profitable course moving forward. We’re constantly updating our roster of new vehicles, and if you spot one you like, DriveAxis.ca can take the hassle of a trade-in away, and help you migrate to your new vehicle in no time.