Kelley Blue Book Value For Used Cars
Oleta Blaylock
Kelley Blue Book values are derived from massive amounts of data, including actual sales transactions and auction prices, which are analyzed and adjusted to account for seasonality and market trends. Because the auto market has significant regional differences, they are also adjusted to reflect local conditions in over 100 different geographic areas and are updated weekly to give consumers up-to-date used-car pricing information. To gain all the data necessary, KBB uses several key data sources including wholesale auctions, independent dealers, franchised dealers, and private party transactions. Traditionally, it has relied heavily on wholesale auctions because they reflect information from key sources including consumers, dealers, financial institutions, rental fleets, and leasing companies.
Kelley Blue Book used car values are not precise, and KBB doesn't claim they are precise to the penny. It acknowledges that it is a "guidebook" and that the values it published are estimates. But they are not "stabs in the dark," but instead are estimates based on a well-established process, giant amounts of data, and generations of expertise in determining and, in some ways, establishing vehicle values. Kelley Blue Book calls it "a proprietary editorial process." One key thing to remember is that the used-car values don't have to be perfect to the dollar to be useful to all the entities that need pricing information. Instead, they simply need to be close enough to give the buyer and seller a common understanding of the limits of the transaction.
As former Kelley Blue Book President Paul Johnson once said, "One thing we know about each used car value is that it will be 'wrong,' but each value will be close enough to the
'real' value that it will facilitate the transaction."
Kelley Blue Book used-car trade-in value is the amount a consumer could expect to receive from the dealer if she or he traded it in as part of a transaction for the purchase or lease of
another vehicle. Keep in mind that this assumes an accurate appraisal of the vehicle. It is also important to note that the trade-in value is often less than one would receive if selling the car to a private individual, and it could be more than if it were sold directly to a dealer.
The Kelley Blue Book used-car private party value is what a consumer can expect to pay if buying a used car from another consumer. As with all Kelly Blue Book values, the private party
value is a guide. It can change depending on several factors. For instance, if there is a warranty attached to the vehicle, the value is likely to be higher than the general private party value because warranty coverage itself adds value.
The certified pre-owned value of a used vehicle is also typically higher than the private party value. It incorporates the fact that the vehicle is offered with a warranty rather than as-is, which is the way the typical used vehicle is sold. Since warranty coverage offers peace of mind that customers are willing to pay extra for, the "CPO value" reflects that. Of course, no individual seller offers certified pre-owned used cars, so the CPO value takes into account the dealer's profit, cost of advertising, sales commissions, and other costs of doing business.
Black Book is what dealers usually refer to when trying to figure out how much a used vehicle or trade in is worth. Black Book originally began in 1955 literally as a black book containing weekly car values for every vehicle and every region in the country. Today Black Book ( ) is available via the web or mobile through a paid subscription.
Black Book offers various paid subscription options. The main subscription that Dealers use includes trade in values and information on cars and light trucks. These vehicle appraisals help dealers calculate vehicle leases and used car and truck prices.
Beyond both Black Book and Kelly Blue Book, another useful tool for figuring out vehicle price is NADA ( ). National Appraisal Guides, Inc. is the largest publisher of vehicle pricing, information and tools for new and used cars.
As a rule of thumb Kelley Blue Book values are a pretty good indicator to use when buying vehicle from an individual or when selling a vehicle to an individual. The Blue Book values tend to be a little on the high side when buying used vehicles from a dealership or when trading in a vehicle.
Black Book Vehicle Pricing. The Black Book is what dealerships typically use to lookup pricing information about new, used car, truck, and recreational vehicle prices. Black Book updates the Dealer invoice and Manufacturers Suggested Retail Prices (MSRP) weekly. Dealers also use the Black Book loan values for finance purposes.
As stated above, the Black Book is what dealers usually refer to when trying to figure out how much a used vehicle or trade in is worth. Consumers will typically use Kelley Blue Book values when estimating new and use vehicle costs.
In realistic terms both Kelley Blue Book (KBB) and Edmunds give an approximation of vehicle value based on various sources. Both the Kelley Blue Book and Black Book are generally used when buying a car from a dealership.
You can think of the Black Book values as an estimated wholesale value of a vehicle that dealers use to ensure profits when buying or selling used cars. From a consumer standpoint, a dealer will always look to make a profit, so you can expect to pay over the Black Book value when buying used and under the Black Book value when trading in or selling your vehicle to a dealer.
One of the digital tools that gained significant adoption among dealers in 2020 and 2021 related to vehicle valuations. The 2021 Cox Automotive Car Buyer Journey Study found that consumers used Kelley Blue Book Instant Cash Offer more often to get a value for the vehicle they wanted to sell or trade compared to other valuation services (e.g., CarMax, Carvana, Cargurus).
The heightened interest among consumers to use these tools to get a valuation for their vehicle, and their adoption among dealers, owes in part to market conditions. With used vehicle values largely on the rise between 2020 and 2021, and a seemingly constant stream of news media stories highlighting the historic rise, a greater number of consumers wanted to know what their vehicles might be worth. Some wanted to sell them directly to a dealer for cash; others wanted the valuation as part of a trade-in.
Meanwhile, direct-from-consumer acquisitions became more critical for dealers as wholesale values appreciated and auction-purchased inventory became increasingly expensive to acquire and less profitable to retail. Many used digital tools like Kelley Blue Book Instant Cash Offer to expand or launch efforts to acquire vehicles directly from customers through off the street, service lanes and we-buy-cars programs.
When you're car shopping on a budget, buying used is one of the smartest moves you can make. Because cars lose most of their value in the first few years, buying used allows you to drive a vehicle you probably couldn't afford brand new. In fact, cars lose as much as 20% of their value in their first year, and after three years only retain about 55% of their original cost, giving used-car buyers the opportunity to save some serious cash.
Recent used models -- those that are less than five years old -- can be a real value because you get a nearly-new car still in fine working order for a fraction of the new-car price. And you'll pay less for collision insurance and taxes too.
The trade-off, of course, is that you don't know if a pre-owned car has any hidden problems that will come back to bite you in the wallet down the road. Finding a used car isn't tough -- they're in plentiful supply these days at dealers and from private parties. You can search for cars from both at Autotrader.com and Cars.com, and find a wealth of information; from how many miles the car has on it to how it's equipped. Still, buying used often feels like a gamble. How do you know you're getting a good deal? How do you avoid ending up with a lemon?
4. Consider certified cars. Sales of certified used cars have been on the rise for the last several years and they offer many of the perks of a new car. Typically off-lease or corporate fleet vehicles, they're not only "young in age and have low mileage, but have been meticulously maintained," says Basso.
5. Know what it's worth. You also need all the facts about the car's value. In addition to the standard pricing guide of Kelley Blue Book, which notes that their retail values are the starting point for negotiations between a consumer and dealer, check used car values at NADA Guides and Edmunds.com. The True Market Values given on Edmunds.com are based on actual transaction prices and by using its Used Car Appraiser, you can input the specifics of your potential buy and get a more accurate price.
Figuring a fair price for a used car is just one piece of the pricing pie. Be prepared to haggle with a private party or a dealer, and know that dealerships tend to put their best salespeople in the used car department. (Learn how to negotiate your way to a good deal.) If you want to skip the pressure, check out CarMax, which offers "no-haggle prices" based on Kelley Blue Book values. (Learn more about no-hassle car buying.)
aa06259810