Five reasons why you should get a car valuation
The value of anything is driven by the balance of supply and demand, and it’s no different for cars. How well a car retains its value depends on how desirable it is and how many of them are available – so even if there’s a good supply, you can still pay plenty if there’s also a strong demand.
Just look at cars such as the BMW Mini, Audi A3 and Range Rover Evoque. There’s one on every corner, but because they’re also held in such high esteem by used car buyers, you’ll always pay plenty to buy one.
The thing is, there’s no way of knowing what your car is worth without referring to some kind of valuation service. Just because you paid £10,000 for it a year ago, it’s impossible to say what it’s worth now. Besides, if you bought it from a trader you’ll have paid top whack for it, and it’ll immediately be worth significantly less than you shelled out for it if you then sell it privately or trade it in. To understand this better, check out our blog on how depreciation works.
And here we’ve opened a can of worms, because your car doesn’t have a set value as such. Instead it has a range of values depending on whether it’s for sale at a dealer, being traded in against another car or being sold privately. It might also be going for auction – in which case that’s yet another value you can put against it.
So, if you’re buying a car from a dealer it’ll be valued relatively highly. If you’re selling privately it won’t be worth as much while if you’re trading it in it’ll be valued even lower. But the lowest valuation of all is the one attached to your car if it’s set to be auctioned, because this is the bargain-basement way of buying a car, as there are so many risks attached. But why would you need to value a car in the first place?
You’re buying a car
Nobody wants to pay more for a car than they have to, or than it’s worth. The problem is, looking at what else is about and making comparisons doesn’t always work because each car is unique. Its engine, trim level, bodystyle, transmission, mileage and age will all affect what it’s worth – and so will how sought after it is.
The best way of knowing that you’re not paying over the odds for that used car is to get a valuation on it, as this will take into account what the supply and demand situation is. For example, you could have two cars that are identical aside from one having an automatic gearbox and the other a manual. If it’s a sports car the latter would be more desirable but if it’s a luxury car a manual transmission might make the car virtually unsaleable. You’ve got to change just one aspect of a car’s specification and it can have a much bigger effect on the value than you might expect.
You’re selling your car
You want to get the most cash that you can when selling your car, and just like in the example above, there’s a multitude of factors that can affect what your car is worth. You might have a three-door hatchback when buyers demand five doors, or you might have a petrol-engined SUV when everybody wants diesel.
Looking at what other people are asking for their similar cars is worthwhile, but to find out exactly what you should be asking for yours is only really possible by getting a tailored quote – which is what hpi valuations can offer you. And best of all it’s free.
Your car has been crashed
If your car is damaged in a collision it could well be written off if its value is too low relative to the cost of repairing it, as our blog explains. When your insurer tries to settle with you they’ll be reliant on you taking their word for it, in terms of how much your car is worth and whether repairs are economically viable.
By arming yourself with the real value of your car you could get more money out of your insurer in the event that it’s written off. Alternatively, you might be able to persuade your insurer to repair your car because it’s worth more than they’re claiming.
Your car has been stolen
As with a written-off car, if you’re in a total loss situation in the event of an insurance claim you want to ensure you’re given enough money to get back on the road. This one is pretty straightforward in that if your car is stolen you need to establish what it’s worth so you can budget what cash you’ll have to spend once your insurer has paid out. If they come to you with an offer that’s significantly lower you’ll need to negotiate with them for a more generous settlement.
You’re thinking of replacing it
Some people hang onto their car until it’s fit only for scrap while others like to chop and change to suit their mood. If you’re in the latter camp you need to know how much equity is in your car to work out whether or not you can afford to trade it in against something else.
Where finance is involved this is especially important, as you need to know whether or not you’re in a negative equity situation; our blog on what happens when your car is written off will help here. If you owe more on finance than your car is worth you’re probably not in a position to change cars, but if your current transport is really unreliable it might be that you have no choice and somehow you need to make things work.