How to Value Used Cars & Factors Affecting Vehicle Value

Used car valuation is the determination of the current value of a used car. This process helps buyers and sellers come up with a fair price based on many different factors.

Currently, cThere are two common ways to calculate the value of used cars: calculating the price based on the registration fee price and calculating the price based on the actual vehicle condition. In particular, the calculation based on actual condition is more commonly used because the valuation is close to the value of the car.

The high or low price of a used car depends on many factors such as year of manufacture, number of kilometers, vehicle condition, version, color, brand/origin, and region. In addition, subjective factors such as market demand, buyer psychology and a number of other factors such as vehicle document status, maintenance history, warranty policy, vehicles on the "black list" are also affects the selling price of used cars.

Buying a used car is a more economical option than buying a new car. However, buying a used car also poses many risks if not done carefully. Therefore, buyers, in addition to accurately pricing cars, also refer to notes when buying used cars, quality car brands, vehicle life cycle, reputable trading addresses... to make the best decisions.

This article will help Readers have more knowledge and experience to effectively and accurately price used cars, buy new cars at economical prices and prevent potential risks. Follow now. 

1. What is the most popular way to calculate the value of used cars today?

There are two popular ways to calculate the value of used cars today: calculating the price based on the registration fee price and calculating the price based on the actual vehicle condition. Among them, the calculation method based on the actual situation is more commonly used.

1.1 Calculate price based on registration fee calculation price

According to Clause 4, Article 7 of Decree 10/2022/ND-CP, the registration fee calculation price for used cars is the remaining value of the vehicle as of the time of transfer. In particular, the percentage of remaining value of the vehicle is determined based on actual usage time, specifically:

Note: This calculation is based on the vehicle's usage time to determine the remaining value ratio and applies this ratio to the new car value to calculate the used car price. For example: A 5 year old car has a residual value of 50%. The value of the new car is 1 billion VND. Used car price = 1 billion * 50% = 500 million VND.

The method of calculating the price of a used car based on the registration fee price will often not accurately reflect the actual value of the car because it does not take into account other influencing factors such as car condition, brand, car color, etc. ... Therefore, this calculation method only applies to used car buyers to pay registration fees.

1.2 Calculate price based on actual vehicle condition

Calculating the price of a used car based on the actual vehicle condition will help more accurately reflect the actual value of the vehicle and help buyers make wise decisions. You can do the appraisal yourself or hire a car appraisal service to give the closest price possible. The formula for calculating used car prices is as follows:

1.2a How to calculate the value of a skimming vehicle

Surfing car is a concept used to refer to used cars, with a mileage of less than 10.000km, even just a few hundred km, or after 1 year of use. Surfing cars have almost no depreciation in value, and are considered "older than new cars, but newer than old cars". In other words, these are used cars but are still very new, retaining their value and quality almost intact. 

In particular, fees and charges include: Registration fees, car registration fees, registration and license plate fees, etc.

1.2b How to calculate the value of a used car

In which:

• Depreciation value:
  • • The level of depreciation depends on the vehicle model, vehicle segment, and usage time.
    • The more expensive the car, the higher the depreciation. The more durable the car, the lower the depreciation.
• Influencing factors: There are many factors that affect car value from objective to subjective. Some important factors include:
  • Brand: Famous cars, keep prices better than lesser-known cars.

• • Origin: Imported cars are higher than domestic cars.

• • Vehicle color: Popular colors, easier to sell than rare colors.

• • Vehicle condition: Nice car, low mileage, complete papers, higher price.

2. What factors affect the value of used cars? 

There are many factors that affect the value of used cars, from objective (year of manufacture, number of kilometers, vehicle condition, version, color, brand/origin, region) to subjective (needs). market demand, buyer psychology) and other factors (vehicle document status, maintenance history, warranty policy, vehicle on the "black list"). Specifically:

2.1 Objective factors

Objective factors affecting the value of used cars are year of manufacture, number of kilometers driven, vehicle condition, version, color, brand/origin, and region. These factors specifically affect car prices as follows: 

• Year of manufacture

Year of manufacture is one of the most important factors affecting the value of a used car. The older you get, the more the car's value decreases, because as technology develops, buyers' needs are often directed towards new, modern car models. Best of all, the older a vehicle gets, the more mechanical parts wear out, leading to reduced performance and increased repair costs. Below are general rules about the depreciation level of old cars according to year of manufacture:

• • First 3 years: Depreciation from 10% - 15%/year.
  • From year 4 to year 7: Depreciation from 7% - 10%/year.
  • From year 8 to year 10: Depreciation from 5% - 7%/year.
  • After the 10th year: Loss of value from 3% - 5%/year.

• Number of kilometers run

The number of kilometers traveled (ODO number) is a factor often considered when buying and selling used cars. It is considered a measure of the vehicle's "war history", directly affecting the vehicle's value. Normally, the higher the ODO number, the lower the car price.

However, rewinding a vehicle's speedometer is now quite easy, making the ODO number no longer a completely reliable factor for valuing used cars.

• Vehicle condition 

The actual condition of the car plays a prerequisite role in car valuation, even more important than the car's age. Because it reflects the level of wear and tear, predicts repair costs and saves fuel, ensuring user safety. Even a car that has been involved in an accident or has been hydro-damaged will lose significant value. The actual situation includes many aspects:

• • Exterior: Paint, lighting system, rearview mirror, radiator grille...
  • Interior materials: Car seats, air conditioning, entertainment system (screen, speakers),...
  • Chassis: Intact condition, no warping, rust, etc.
  • Operability: Engine, gearbox, brake system,... operate smoothly and stably..

Actual condition is a key factor when buying and selling used cars. Please carefully check the exterior, interior, chassis and performance to ensure the car has value commensurate with the selling price.

• Version

Version is a factor that directly affects the value of used cars. High-end car versions are always more expensive because they are equipped with more amenities, modern and safer features and are less depreciated than the standard version.

• Color

The psychology of choosing car color is a factor that cannot be overlooked when buying and selling cars, especially used cars. According to the survey, silver and black are the most popular colors, leading to higher car values ​​than other colors.

In addition, cars with unique colors and personality may attract some buyers, but the resale value may be lower because it is difficult to find a suitable buyer. At the same time, cultural factors and feng shui also affect the choice of car color, some colors that match feng shui are quite expensive.

• Vehicle brand/origin

Brand plays a key role in vehicle pricing. Cars of Japanese brands such as Toyota, Honda,... are often more valuable than Korean cars such as Kia, Hyundai,... Cars with high liquidity are often easy to sell and lose value less. In Vietnam, the value of used cars is gradually classified into the following groups:

• • Group 1: Toyota (highest ability to keep prices).
  • Group 2: Honda.
  • Group 3: Mazda, Mitsubishi, Ford.
  • Group 4: Kia, Hyundai, Nissan.
  • Group 5: Isuzu, Suzuki.
  • Group 6: Mercedes, BMW, Audi, Lexus.
  • Group 7: Porsche, Volkswagen and other luxury and supercar brands.

The origin of the assembled or imported car also determines the choice of used car. Vietnamese consumers always trust and appreciate the technology and equipment used in assembling imported cars over domestically assembled cars. Therefore, used imported cars will be chosen more and may be slightly better in price. 

• Area

Region can affect used car prices in a number of ways:

• • Level of competition: Areas with many used car dealers have a high level of competition, used car prices are often lower than areas with few dealers.
  • Transportation costs: In areas with high vehicle transportation costs, used car prices are often higher than in areas with low transportation costs.
  • Level of economic development: Areas with good levels of economic development, people with high incomes, used car prices are often higher than areas with low levels of economic development.

2.2 Subjective factors

Market demand and buyer psychology are two subjective factors that have an important impact on used car prices. Specifically: 

• Market demand

Market demand is one of the most important factors affecting used car prices. Good times to buy used cars:

• • End of the year: demand for buying and selling used cars will be more bustling.
  • When companies launch new versions: prices of old versions and used cars will decrease
  • After the holidays: the need to change cars is often higher.
  • ...

• Buyer psychology

The psychology of used car buyers is quite diverse, they may encounter the following types: 

• • There is always a tendency to look for used cars that are cheap and of good quality. This causes the price of used cars to be pushed lower than their real value.
  • Worried about buying an accident car, a flooded car, an overhauled car, etc. This makes them tend to pay a lower price than the seller's original selling price.
  • Tend to trust famous and reputable car brands. This causes used car prices of these brands to be higher than those of lesser-known brands.
  • Some popular car colors such as white, black, silver are often more popular than other car colors. This causes the price of used cars in popular colors to be higher than for less popular colors.

2.3 Other factors

When buying a used car, buyers are always interested in vehicle documents, maintenance history, and warranty policies to partly understand how the car has been used. At the same time, we will avoid buying vehicles on the "black list" to minimize risks encountered later. 

• Vehicle document status

The condition of vehicle documents directly affects the value of used vehicles. Vehicles with all valid documents will obviously have a higher price than vehicles lacking documents or with invalid documents.

• Warranty Policy:

A car still under warranty will have a higher price than a car out of warranty.

• Maintenance history 

Vehicle maintenance history shows the car owner's level of concern for vehicle maintenance. A car that is regularly and fully maintained will have a higher price than a car that is not maintained or inadequately maintained.

• Vehicles are on the "black list"

In buying and selling used cars, there are a number of vehicles on the "black list" that buyers often avoid:

• • The old car had an accident: The vehicle's structure, chassis, and safety systems may be affected, leading to danger when operating. Difficulty in determining the severity of the accident and the long-term effects on the vehicle. The car's value will decrease significantly compared to a car of the same type without an accident.
  • The old car had been hit by a water attack: The electrical system, engine, and interior can be severely damaged, leading to high repair costs. Signs of water damage can be subtly hidden, making it difficult for buyers to recognize. The vehicle may have many electrical and engine problems, leading to danger when operating.
  • Returned taxi: High depreciation because it has been driven for long distances and has a lot of wear and tear, leading to reduced lifespan. Taxi cars are often used continuously and are rarely maintained thoroughly. The value of taxis will decrease quickly after being resold.
  • Grab car: Similar to taxis, Grab cars are also used continuously, leading to a lot of wear and tear. The interior may be changed or repaired to suit Grab services, affecting the vehicle's value. The value of Grab cars will decrease rapidly after being resold.
  • 10 year old car: The operating system degrades, parts and systems on the vehicle may be damaged, leading to high repair costs. Vehicles that are too old may not meet new emissions standards, affecting registration and circulation. The car's value will decrease quickly because it has been used for a long time.
  • Used car of unknown origin.
  • Old cars have been modified and modified a lot.
  • Used cars have incomplete legal documents.

3. Frequently asked questions when valuing used cars

3.1 What to note when buying a used car?

Buying a used car is a more economical option than buying a new car. However, buying a used car also poses many risks if not done carefully. Things to note when buying a used car: clearly determine your needs, budget, find out information about the car, check the car, legal documents, negotiate the price, find a reputable address.

Determine needs and budget:

• Clearly determine the need to use the vehicle (carrying people, transporting goods, traveling long distances or within the city...).
• Determine a budget suitable to your financial ability.

Find out information about the car:

• Learn about brands, car models, and car years that suit your needs and budget.
• Refer to the market price of cars of the same type.
• Read reviews and comments about cars online.

Check the car:

• Thoroughly check the exterior, interior, engine, gearbox, electrical system, etc.
• Test drive the car to feel the vehicle's condition and performance.
• You should bring your car to a reputable garage for technical inspection before buying.

Legal documents:

• Carefully check the vehicle's legal documents such as vehicle registration book, documents proving vehicle origin, etc.
• Make sure the vehicle has no disputes, mortgages or is banned from circulation.

Bargaining:

• Refer to market prices to come up with a reasonable price.
• Negotiate price with the seller based on vehicle condition and other factors.

Choose to buy from a reputable source:

• Choose to buy cars from reputable dealers with good warranties.
• Avoid buying cars from sellers who are unclear or do not have complete documents.

When buying a used car, don't make a hasty decision, but ask carefully about the usage history, maintenance, and references from experienced people. On the day of the car inspection, you should go with someone who is knowledgeable about cars to avoid buying the wrong car and losing money. 

3.2 What car models should you consider when buying a used car?

Buying a used car requires considering many factors, including usage needs, budget, and suitable car models. If buying a popular car, you can refer to the brands Toyota, Honda, Hyundai, Kia; When buying a high-clearance car, you can refer to cars from Ford, Mitsubishi, and Isuzu; When buying luxury cars, there are famous brands such as Mercedes-Benz, BMW, Audi...

3.3 How many years is the life cycle of a car?

According to statistics, the average lifespan of cars worldwide is about 13 years or 270.000 - 320.000 km. Here are some signs that a car is reaching the end of its life cycle:

• Engine and gearbox: Vehicles often have engine and transmission problems and lose a lot of fuel.
• Power system: The electrical system is unstable, the headlights, taillights, and turn signals are not working properly.
• Rust: The chassis, chassis, and body of the vehicle have many rust stains.
• Interior materials: Degraded interior, cracked and peeling leather seats, aging plastic parts.

3.4 Address for selling reputable used cars at good prices in HCM?

Thanh Phong Auto is proud to be a reputable address for providing used cars at good prices in the Southern region. Operating for more than 10 years in the industry, with a team of experienced and dedicated technicians, Thanh Phong Auto is committed to bringing customers the best quality used cars, with the most standard and competitive prices on the market. .

Reasons to choose Thanh Phong Auto: 

• Providing a variety of used car models from popular to high-end, meeting a variety of customer needs.
• All used cars sold at Thanh Phong Auto undergo strict inspection by a team of experienced technicians.
• Standard pricing, correct with depreciation rate and competitive with the market, 
• Good after-sales service with vehicle warranty services, repair support, spare parts replacement,...
• Professional staff, ready to advise and assist customers in choosing the most suitable car.

Coming to Thanh Phong Auto, you can be completely assured because:

• Say no to car crashes, spare parts replacement, flooding, etc.
• Commitment to complete vehicle documents and maintenance history.
• Supports title transfer and vehicle registration procedures quickly.
• Providing warranty, repair and replacement services with genuine spare parts.

Choosing a reputable place to buy used cars will help you minimize all future risks. Therefore, you should carefully research the service provider to receive a safe and suitable vehicle.