BlueBook car prices aren’t always accurate because there are a variety of factors that go into calculating a used car’s value. Whether you use the Kelley Blue Book guide or prefer NADAguides.com, the book pricing of vehicles can be a little misleading. While completing research via a service like Kelley Blue Book or NADAguides.com can give you a reasonable idea of your vehicle’s trade-in, private party or retail value, used car pricing can vary significantly from city to city. When researching KBB prices it is important to remember that there are many factors that can result in a book value being inaccurate. This guide will highlight the ways in which book value trade-in prices and retail prices can be less than accurate.
From the perspective of a used car dealer, the Kelley Bluebook provides them with an accurate retail price of a certain car. That is to say, the listing reflects an average price that dealers have received for the car. That is essential. The Kelley Bluebook does not give the car’s value, only its recommended retail price. In that sense, it is very accurate.
Many car buyers complete research on Kelley Blue Book regarding the trade-in value of their current vehiclehowever when shoppers visit the car dealership, they often find that they are offered much less than the KBB quote for their vehicle. Book values for trade-in vehicles are dependent on a variety of factors, including the condition of the trade. Most car owners believe their vehicle is in excellent shape when completing research online. In reality, only a small percentage of cars are in excellent condition, and dealerships will most likely offer an amount near or below the fair trade-in value. In reality, the fair trade value represents the wholesale value of your trade; that is, the amount a dealership could purchase a comparable car for at an auction. Although a dealership may give you more than fair trade value for your vehicle, this will not likely be their first offer.
Additionally, trade-in values may be lower than the KBB prices because of how dealerships show loan payoffs on sales transactions. If a vehicle has a remaining balance, some lenders will require the dealership to show the full payoff amount for the trade-in to complete the sale. For example, in order to show the full payoff amount on the buyer’s order, the dealership may have to raise the selling price of the new vehicle and proportionally raise the amount given for the trade. Although this has no bearing on the transaction, it does falsely boost the trade-in value of used cars. Therefore, while KBB is a good guide, you should always account for some variance in trade-in value because of inconsistencies in lender requirements.
KBB quotes for retail values are not always accurate because they may not account for additional investments that a dealership has made in a vehicle. For example, while all dealerships try to purchase cars near the wholesale value, a car or truck may require thousands of dollars in reconditioning before it is offered for sale. The retail value may not account for this additional expense while also allowing for the dealership to make a profit. In many cases, you can negotiate a better deal than what KBB prices dictate, but this may not always be possible. Retail values may also be inflated similar to trade-in values, as a dealership may need to increase the selling price of a vehicle to offset negative equity in order to get a sale financed.
Hearing a car dealer quote the Bluebook price means they are telling you what the car should be able to sell for in the retail market. That means profit for them in addition to the value of the car. Therefore, if a dealer tells you they have priced a car below Bluebook, that in no way means they are selling it for less than it is worth.