What is a car valuation?
A car valuation or appraisal is an estimate of the price a car could fetch on the open market. It can help you find out if you have the right price in mind when insuring, buying, selling, or trading in a vehicle.
How is a car valuation calculated?
Car valuation tools typically combine market data with your car's details to estimate what it's worth. Most free and paid tools, such as those offered by RedBook, Carsales and Drive, look at current listings and recent sales to see what cars of the same or a similar make and model are selling for, then use the details you enter to give you a personalised figure.
Here's what typically goes into an online car value estimation:
Make, model, and variant
These three factors are the starting point for any valuation. However, even two cars of the same make, model, and variant can have vastly different market values, depending on things like their condition, service histories, locations, and aftermarket features.
Year of manufacture
Cars tend to depreciate over time, though some models hold their value better than others.
Odometer reading
Generally, the more kilometres on the clock, the lower the estimated value of a vehicle. Valuation tools use average annual kilometre benchmarks to gauge whether your car has been driven more or less than ‘normal’ for its age.
Location
Many online tools factor your postcode or state into an estimate. Supply and demand for the type of vehicle can vary by state, impacting valuations. For example, a diesel ute might command a premium in regional Queensland, while the same vehicle in inner-city Melbourne might attract less interest.
Condition and service history
It’s difficult for automated tools to account for the condition of a vehicle, which is part of the reason why most will offer a price range rather than a fixed dollar value. A car in excellent condition with a complete service history will likely sit higher on a price range, while one with scratches, mechanical issues, or missing logbooks will sit lower.
Optional extras and features
Leather seats, a sunroof, roof racks, or a towbar can all help increase the value of a vehicle, though not all tools are able to capture factory options or ‘aftermarket’ additions with great accuracy.
It's worth understanding that online valuations are estimates based on averages and are best used as a starting point. If you want a more precise figure, particularly for insurance purposes or a private sale, a valuation from an independent or qualified vehicle valuer or a dealership assessment could give you a more tailored figure.
When would you need to value your car?
Regardless of whether you’re selling or buying, understanding the market value of a car is important. Here are a few scenarios where you might need to know how much your car is worth:
Selling a car
If you’re considering selling your vehicle, a car valuation can make it easier to set a more accurate listing price, potentially helping you fetch a fair price or sell your car faster (or both).
Buying a car
Whether you’re buying your first car or upgrading, a car valuation could help you buy a car for a fair price. It can also help you understand the market value of the car you’re looking at, putting you in a stronger negotiating position.
Trading in a car
If you are considering trading in your vehicle, understanding its value can help you decide whether to sell your car privately or trade it in for a newer one at a dealership.
Taking out or renewing an insurance policy
Having a clear idea of your car's value makes it easier to choose the right type of cover. When taking out or renewing a car insurance policy, you’ll need to decide whether you want your car to be insured at market value or agreed value.
What's the difference between market value and trade-in value?
If you’ve ever received a trade-in quote from a dealership and wondered why it’s less than what you’ve seen similar cars listed for online, it comes down to two different pricing models.
What is market value?
Market value is what your car would reasonably sell for on the open market and reflects current supply and demand for the particular make and model. It’s also the number your insurer uses to work out your payout at the time a claim was made if your car is written off or stolen under a market value policy.
What is trade-in value?
Trade-in value is what a dealer is willing to pay you for your car when you're buying another one from them. Because the dealer needs to make a margin when they on-sell your vehicle, trade-in offers are often lower than private sale prices.
How to find the market value of your car
There are a few ways to find your car’s approximate value. A common method is using free online appraisal tools, offered by some classifieds and car websites. After entering a few details about your car, including its make and model, kilometres travelled, and age, these online tools can often give you an estimate within seconds.
The main disadvantage of these online valuation tools is that they often provide an automated estimate that can’t account for every detail of your car.
If you want a more detailed appraisal, taking your car into an independent valuer or dealership will likely be your best option. It could also be handy to arrange this for any vehicle you are considering buying, with the seller’s permission, of course. The valuer or dealer may also be able to conduct a pre-purchase inspection to ensure there are no major faults with the car.
What can I do to improve the value of my car?
Keeping your car in top-notch condition can help it hold its value. Some tips to help you do so include:
- Clean it: Make sure you clean your car thoroughly before putting it up for sale. Many detailing companies offer specific services for people planning to sell their car.
- Keep a complete service history: An incomplete service history can impact the price of your car.
- Replace faulty parts: Parts that don’t work properly (such as faulty internal buttons or lights) can decrease the value of your car.
