If you are in the market to buy or sell a used vehicle, you may be wondering about how the value of pre-owned cars is determined. It is easy to figure out what sorts of characteristics add to the value of a used car - low mileage, strong engine, straight body among others. When it comes to actually figuring out how much should be charged or paid for any given used car is a bit more complicated. Because the value of two seemingly similar used vehicles can vary greatly in age, condition, options and more, used vehicles must be valued on an individual basis.

Price Levels Based on Sales Format The value (i.e. price paid) for any used cars will be different depending on whether the car is being sold by an auto dealer or being sold by a private party. The value will be altogether different if you are considering using a used auto as a trade-in on a newer model.

The value a private party can expect to be paid on any given used vehicle is generally considered a baseline value. Retail value, or what you can expect to pay for a used car at a dealership can be up to 20% higher than private party value. Trade-in value, on the other hand, is typically about 20% lower than private party value.

Valuing the Vehicle Simply put, used cars are valued based on their specific characteristics (including all aspects of the condition) and the local and national used auto market. As aforementioned, because each used automobile is unique and has its own value, there are no hard and fast rules about the value of any given make or model. On the other hand, there is a method by which buyers or sellers can somewhat accurately determine the value of a vehicle as pertinent to his/her own perspective.

Step 1 - Appraising the Vehicle Prepare to conduct your own used car appraisal. Collect information about the car such as Make, Model, Year, Options, etc. Get the VIN number from the car and run a CARFAX report to research the cars history. This will ensure you dont get stuck with a lemon thats had major damage or a car that was ruined in a flood.

- Excellent - pretty much still in new condition - Good - Only minor mechanical/electrical problems and very little wear - Fair - Car may have mechanical problems, but engine runs; interior and exterior may show significant wear - Poor - Car may have severe mechanical problems, exterior will have damage and rust

Step 2 - Market Research Once you have a good idea of the cars options, history and condition, its time to figure out its value. Start by researching the value on Web sites such as Kelly Blue Book or NADA. After doing so, look for similar vehicles that are for sale in your local area and compare the prices. If you can get 2 or 3 different prices for roughly the same used car, you can take the average of the prices to come up with a relatively fair market value.

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