Friday, December 19, 2014

What's the Real Price for That Used Car? Different Pricing Services Have Different Numbers

Unlike new cars, where manufacturers set the price before negotiation, used-car prices are all over the lot--and beyond. Prices at the car dealer alone don't determine what a used car or truck is worth. About one-third of all used cars change hands in private sales. If you are about to buy or sell a used car, you need some guidance.

Four major price services for used cars gather and present information differently--and often produce different results. These businesses started out being all about the books. Black Book, Kelley Blue Book, and the NADA (National Automobile Dealers Association) Used Car Guide--an orange book--all started with the guides that used-car pros at wholesale auctions and at dealerships carried. These three services now also offer data online--the most useful and efficient place for you to look.

A more recent entry,, is an Internet-only service aimed strictly at consumers. Depending whether you're buying or selling a used car, and if you intend to deal with a dealership or another individual, you need to know where to check for the most useful information.

Before you start checking prices, though, here are some used-car basics to remember. If you're planning to buy a new car, you almost always can get more for your old car selling it yourself than if you trade it in. But don't expect to get the same price for your used car as the number you see in local dealer ads for the same model. The dealer can offer used-car buyers a limited warranty (often 30 days) and financing, and probably will have the vehicle in better shape for sale than you will. Dealers now also offer so-called certified used cars with warranties of one year or more, often backed by the original manufacturer.

Your credit union can help with great rates on auto loans and all your financing needs.

If you're looking to buy a used car, you are on the flip side of these realities: You'll get a better price buying from an individual but probably will have no recourse if defects turn up after the sale.

Here, in alphabetical order, is a rundown of the methodology and what information you will find from the four major used-car price services. Online used-car prices are adjusted for broad regions--the Southeast, say, or the West Coast. So double-check the prices you're getting against ads you see for your town in newspapers or on local Web sites.

Black Book

The Black Book organization sells subscriptions, mostly to automotive industry companies and dealers, for its books and online data. But you can get its pricing for free from many credit union Web sites and at online automotive sites like

Black Book bases its weekly updates on wholesale auction prices--with its staff attending about 50 auctions a week either in person or following online auctions where dealers buy and sell cars. "Our editors adjust that data by mathematical factors and their own experience to get the trade-in and retail prices," explains Ricky Beggs, vice president and managing editor. "Then we double-check our numbers constantly against dealers' advertised prices."

Black Book bases its weekly updates on wholesale auction prices--with its staff attending about 50 auctions a week either in person or following online auctions.

Black Book pricing will give you trade-in value and dealer's retail price for three levels of car condition: clean, average, and rough. Black Book doesn't try to determine so-called private-party values from individual sales. In comparisons of two high-volume recent models, a 2003 Ford Escape small SUV and a 2004 Honda Accord sedan, Black Book data for a car in average condition showed lower trade-in values than the NADA Guides and higher than Kelley Blue Book and On retail pricing, Black Book was lower than Blue Book and NADA and similar to

Edmunds collects data from auctions and new and used-car dealerships, and works to establish a "True Market Value" that it says represents what used cars actually are selling for. Its staff statisticians construct models of how different prices affect one another. Quick adjustment results, says Vice President Bob Kurilko. Take a situation where, for example, a new car rebate knocks down values for used cars of the same model because buying a new one has just become more attractive. "If a manufacturer announces a $1,000 rebate on a 2006 car, the 2005 version just lost $800 in value and the 2004 car $640," explains Kurilko.

The Edmunds Web site, like Kelley Blue Book, gives a "private party" value for used cars sold in individual transactions. Edmunds and Blue Book numbers sometimes are close together, sometimes not. So check both and then compare them with local ads. Edmunds alone also gives a price for certified late-model cars dealers sell. Kurilko says Edmunds' dealer retail prices are lower than Kelley Blue Book and NADA because they represent actual transaction prices and not dealer asking prices.

The price of a car in a trade or resale is exactly what a willing buyer will pay--no more and no less.

Kelley Blue Book

Kelley Blue Book is the oldest (started in 1926) and best-known price service and its Web site gets more visits than any other automotive information Web site, according to the Nielsen Internet rating service. The Kelley organization collects data from auctions and new and used-car dealers and gives trade-in, retail, and private party values for each model. Kelley pioneered the detailed Web site questionnaire to rate carefully the condition of your used car as Excellent, Good, Fair, or Poor. "If real estate is location, location, location then used-car prices are all about condition, condition, condition," says Jack Nerad, executive editorial director of Kelley Blue Book. On retail prices, however, the Web site gives only one level--assuming excellent condition. That is because dealers typically will have a car in good shape for sale on their lots, Nerad says.

NADA Used Car Guide

Published by the National Automobile Dealers Association, a dealer trade group, this guide goes to dealers as part of their NADA membership. You can check NADA prices at its Web site. NADA prices appear to be higher than all the competitors for trade-ins. NADA retail prices also appear similar to Kelley Blue Book and higher than the other two. This results from assuming that all trade-ins and cars being sold are in very clean condition--not the case with many trade-ins. So take this into account if your trade-in vehicle isn't in top-notch condition. Editor Patricia Erney says the NADA retail price is based on reports from dealers of transaction prices for these cars. Also see if your insurance agent or credit union can let you see an industry version of the NADA orange book. It will give wholesale as well as retail values that can help you set your negotiating strategy at the dealership.

You almost always can get more for your old car selling it yourself than if you trade it in.

As with buying a new car, doing more used-car research leads to a better deal. Whether you plan to buy from a dealer or shop carefully among individual ads will determine where you want to do that research.

And remember that no matter what price guide you use, the price of a car in a trade or re-sale is exactly what a willing buyer will payŚno more and no less.

Jerry Edgerton is an automotive writer whose work has appeared in Money and other national magazines. He also is the author of the book "Car Shopping Made Easy."

NCUA Equal Housing Lender

  Home & Family Finance« Resource Center
  Copyright © 1997-2013 Credit Union National Association Inc.

MIT Federal Credit Union