Used car price, how to determine the value ?

[HTSS_TR]

How do you calculate which car is a better value ?

Assume that the conditions are similar, a 2002 Camry with 180k miles is selling at $5000 vs 2005 with 100k miles is selling at $8500.

My opinion: every year newer the value is increase by $1000 plus 20 cents a mile. The 2005 should be $3000 more than 2002, for 80k miles less it should add $1600, so that the value of the 2005 should be $4600 more than 2002. Is it reasonable estimate ?

 

[Drew99GT]

I personally would be more interested in the actual condition of both vehicles; maintenance records, cleanliness etc. Your calculation seems reasonable though.

 

[Quattro Pete]

How long are you planning to keep it? If you get the one with 180K miles and put on say 70K miles on it and then try to sell it, I think it'd be tough to sell a car with 250K miles. But if you're planning to drive it until the wheels fall off, then it doesn't matter I guess.

FYI, according to Edmunds TMV, the first car is worth about $4K (private party sale) while the second car is worth about $7.2K. I understand it's a seller's market though, so Edmunds figures may not be very accurate...

 

[bepperb]

I would think in LA a 10 year old car would be worth more than a similar year/mileage one in Chicago just because of rust issues.

I just assume linear depreciation and zero value at 10 years or 200,000 miles to keep things easy. It's a terrible time to buy a used car right now. Before we bought our Sienna I looked at quite a few 2007~2009 vans with 40~60,000 miles where they wanted within 6 or 8 thousand of new. And they probably got it... from someone else. A five year old car with 100,000 miles should cost half of new, but right now it's probably 66~75%!

 

[HTSS_TR]

According to NADA, a clean 2002 with 180k miles has a trade in value of $4700, while the clean 2005 with 100k miles is $8300.

I'm thinking either Camry or Accord 2004-2006 model year with around 80-120k miles. The used car price seems much higher lately compares with few years ago.

I think I may keep it for 4-5 years then resale, I may put in 10-15k miles a year.

Assume that I buy the 2005 Camry with 100k miles for $8500, I may be able to get back $4500-5000 after 4 years and 50-60k miles. So that the cost per year is around $1000.

 

[kkreit01]

To determine value, I compare NADA, KBB, Edmunds. Also compare "like" cars selling in your area. Anything with over 100k miles, I wouldn't worry too much about it's future value.

 

[Doog]

I average the results from NADA, KBB and Black Book. Even dealers admit the average of those values are pretty accurate.

 

[dishdude]

$4700 for a Camry with 180k? $8300 for a Camry with 100k? I wouldn't buy either. Factor in maintenance and repairs and I'd rather have a 2012 4cyl LE for $18k.

 

[chad8]

you guys are not taking into consideration local markets and hot selling cars even though kbb and edmunds claim they do.
I go on the local craigslist and find asking prices of very similar LOCAL cars. Then do the math taking about 10% off of asking prices.

http://orangecounty.craigslist.org/

 

[HTSS_TR]

Originally Posted By: dishdude
$4700 for a Camry with 180k? $8300 for a Camry with 100k? I wouldn't buy either. Factor in maintenance and repairs and I'd rather have a 2012 4cyl LE for $18k.

The MSRP of 2012 Camry LE with power driver seat is $23.xxx, my friend 's sister bought one about a month ago for $21k, which is about $500-1000 less than other dealers within 100 miles.

 

[HTSS_TR]

Originally Posted By: chad8
you guys are not taking into consideration local markets and hot selling cars even though kbb and edmunds claim they do.
I go on the local craigslist and find asking prices of very similar LOCAL cars. Then do the math taking about 10% off of asking prices.

http://orangecounty.craigslist.org/

I offered $8k for 100k miles 2005 Camry LE with asking price of $8500, the seller didn't accept the offer.

 

[eljefino]

The fallacy is your assumption that anything happens in a straight line. The math is so easy on that, other buyers will hash it out and the market will correct.

You have a several dimensional problem.

If you're set on a Camry, how much would a similar car (years/mileage) have to be discounted for you to consider it instead? Are you looking for basic transportation and have the opinion that a Camry is the best? Is there anything that will shake that?

How much is the finance rate/ insurance/ registration on one vs the other vs new?

Is there any equipment benefit between a 2002 camry vs a 2005?

When you wear a car out, is it from mileage or old age? Age problems are like not finding parts easily, dry rotted hoses/wiring, rust, faded paint...

 

[dishdude]

Originally Posted By: HTSS_TR
Originally Posted By: chad8
you guys are not taking into consideration local markets and hot selling cars even though kbb and edmunds claim they do.
I go on the local craigslist and find asking prices of very similar LOCAL cars. Then do the math taking about 10% off of asking prices.

http://orangecounty.craigslist.org/

I offered $8k for 100k miles 2005 Camry LE with asking price of $8500, the seller didn't accept the offer.


He did you a favor.

 

[needsducktape]

Wow. Prices are high in your neck of the woods.

I personally don't think of it in as simple terms as you do-

Its on a per car basis and frankly the previous owner is the biggest factor.

I would have NEVER considered SAAB ,but when I saw how well the car was documented, the guys garage, etc etc I made a judgment car and happy that I did.

Just because its a ____ (CAMRY,ACCORD,CIVIC) Doesn't make it worth anything just because KBB,NADA say it does. The truth is EVERY CAR'S HISTORY IS DIFFERENT AND SHOULD BE CONSIDERED.
Due diligence required.

 

[rpn453]

Your estimation method yielded some reasonable values. The used car market seems to be a bit of a bubble right now.

http://www.thetruthaboutcars.com/2012/05/auction-day-putting-all-the-holy-in-toledo

Vehicles typically depreciate at 13% to 20% per year and 12k miles. If you live in a non-rusty climate and the vehicle is reliable and in demand, I'd estimate the value of the 2002 to be up to $4200 ($8500*[.87^5]) if the 2005 is worth $8500. So the 2005 is a better deal, IMO, at those prices, assuming they're similarly optioned and in equal condition relative to age and mileage. Comparing to new vehicles, the equivalent new Camry should cost at least $26,000 for the 2005 to be priced reasonably at $8500. For the 2002 at $5000, it's $30,500.

Depreciation rates give rational ballpark values, independent of external factors. But in the end, condition and previous owner are the most important factors for cars of that age. Though one really should avoid allowing the previous owners less than 13% annual depreciation unless the vehicle is somehow exceptional or unusually desirable. Beyond that, buying new begins to make more sense economically. Only vehicles in excellent condition with the best resale values and in non-rusty areas would normally depreciate that slowly according to most publications.

 

[HTSS_TR]

I think Camry and Accord depreciate at a lower rate around 10% with 12k miles a year. I think MSRP of 2005 Camry LE was around $19k, so a 2005 with 84k miles is valued at $9100 today. Since the car has 100k miles so a reduction of $1600 from $9100 make it $7500. But the owner didn't accept the offer $8000.

 

[hattaresguy]

180k is way to many miles, buy the lower mileage vehicle.

IMHO a Camry with 180k on it is a $2k car, junk it when the $3k transmission blows.

 

[rpn453]

Originally Posted By: HTSS_TR
I think Camry and Accord depreciate at a lower rate around 10% with 12k miles a year. I think MSRP of 2005 Camry LE was around $19k, so a 2005 with 84k miles is valued at $9100 today. Since the car has 100k miles so a reduction of $1600 from $9100 make it $7500. But the owner didn't accept the offer $8000.


They must have plenty of buyers in the market who simply don't have the means to acquire a new car at any price. The problem with a 10% depreciation rate is that the original owner gets half the value back after 80k and almost 7 years of use. If sold at that point, the second owner only starts to save money through having bought used once the car is at 160k and over 13 years old, assuming no major repairs are required before that point. Even with just typical minor repairs, the second owner would probably have a 15 year-old 180k car before they reach the point that the unit cost is the same as that of the previous owner, who got to enjoy selecting and owning a brand new car with full warranty and likely very few problems.

13% is where the original owner pays half the value for the first five years and 60k miles. Until very recently, it was exceedingly rare for a used vehicle to have that sort of wholesale value. Even Toyota and Honda typically averaged 15% to 17% depreciation rates in recent history. But that would include the disintegrating vehicles in north-eastern regions. If vehicles in your region typically have plenty of good life left after 15 years and 180k miles, unusually low depreciation rates might make sense.

http://www.thetruthaboutcars.com/2009/12/kbb-resale-values-japanese-lead-americans-gaining/

http://www.thetruthaboutcars.com/2008/11/compacts-top-residual-value-survey/

Of course, the time value of money will also make the used car more favorable. This becomes pretty significant to someone with high-interest debt or high-yield investment opportunities.

Using equivalent new values rather than original MSRP will help account for inflation. At times, in some countries, inflation reached high enough levels that used vehicles would sell for more than the original new sale price!

Just some thoughts to consider from my amateur perception of a complex market.

 

[oilmaven]

Then you have the truly insane used prices like on the Toyota Prius. I saw an ad on the internet for a 2010 base model with about 10,000 miles...asking price was $25,200. The MSRP on a NEW 2012 Prius base is $24,000. Are there actually people out there that don't take the time to research pricing (that sounds better than "too stupid"...)and will pay ANYTHING? I can't believe anyone that would be willing to pay more for a used car than a new one would have the credit to get a loan or the cash to buy it...but then I'm old and naive about a lot of things.

I'm going to keep driving my old Honda until this bubble bursts...not sure when that will be.

 

[eljefino]

Originally Posted By: oilmaven
Then you have the truly insane used prices like on the Toyota Prius. I saw an ad on the internet for a 2010 base model with about 10,000 miles...asking price was $25,200. The MSRP on a NEW 2012 Prius base is $24,000. Are there actually people out there that don't take the time to research pricing (that sounds better than "too stupid"...)and will pay ANYTHING? I can't believe anyone that would be willing to pay more for a used car than a new one would have the credit to get a loan or the cash to buy it...but then I'm old and naive about a lot of things.

I'm going to keep driving my old Honda until this bubble bursts...not sure when that will be.


If they're still milking this alleged "earthquake shortage" it could make sense. Used Trabants were worth more than new ones in East Germany because you could buy them right away instead of getting on a waiting list.

I'm also sticking with my current fleet, thanks to this odd game of "musical chairs".