By Ryan Ong
Here’s a typical frustrating scenario: you have a used car you want to sell, but you have no idea how to price it. You might have one quality that interests a buyer but it’s completely irrelevant to another. No two people will ever agree on what a “good price” is.
What do you do?
Ultimately, pricing your used car is both an art and a science. With just a few basic guidelines, it’s easy to find a price that should please most people.
If you’re unsure on how to even start selling your car, check out this article that teaches you 10 steps you need to follow before selling away your used car. It lists down the 10 things that buyers frequently ask about your before they decided on buying it.
I spoke to Carousell Motors’ Head of Marketing, Bernard Lim, for tips on pricing a used car right. Read on if you finally want to relieve yourself of that price uncertainty!
1. Browse other listings and compare the price of your car
Pricing your used car always begins with looking at other listings. You’ll want to compare prices from other, similar makes and models. If you browse Carousell for a little while, it’s
easy to get a sense of the median price.
However, don’t forget to factor in extra features. Some of these can justify your charging above-average rates. According to Bernard, “there are two main factors that might justify a higher price.”
Factor 1: After-Market Parts
“The first is whether you have expensive and authentic after-market parts,” he shares.
These parts include, but are not limited to:
1. Body kit
2. Suspension system
5. Exhaust system
6. Intake manifold
7. Upgraded engine
“But for some buyers, this can be a double-edged sword”, Bernard cautions. “Some buyers prefer having just the stock car.”
This is due to the worry that some modifications may not be allowed by the Land Transport Authority (LTA), or will affect insurance premiums. Some of these forbidden modifications include air horns, chain guards, and decorative lamps, among other things.
Important note: An insurer may not approve of a modification, even if it is allowed by the LTA.
Factor 2: Cult Status
The second factor is whether your car has ‘cult status’. Not all cars are made equal – some are considered great cars by many in the world, and these cars have developed followings among car enthusiasts.
Bernard shares: “In Singapore, such cars tend to be the older ones; and because of our COE system they tend to be rare as well. These cars can easily fetch a higher price when selling. An example would be the 1999 Honda Civic Type R EK9.”
If you’re unsure about your car’s cult status, just ask a friend who’s a car enthusiast! Although determining cult status can be subjective, you can check out this list for a reliable assessment of cult classics.
2. Consider the mileage when pricing your car
In general, you want to start limiting the use of your car in the months prior to selling it. A lower mileage fetches better prices.
“The higher the mileage, the more the car has been driven, which means at the minimum there’s more wear and tear,” Bernard says, “No one likes to buy a well-beaten workhorse at a high price, in place of a similar model with lower mileage.”
However, Bernard insists you shouldn’t assume every buyer is happy to give you a good price for lower mileage though: “There are many cases of the mileage being tampered with.
In reality, although mileage is important, some buyers will always take mileage with a pinch of salt – they tend to treat all cars as high mileage.
How to address these skeptical buyers:
Leow Ju-Len from TODAY writes from the buyer’s perspective and he emphasises that it’s good to provide technical proof on the low mileage of your car and why that’s an important factor for them to consider.
Pro tip: Have a mechanically-proficient friend come in to persuade buyers that unlike tampered cars, yours is truly low on wear and tear.
3. Factor in the time of year
Don’t be too quick to lower your price if no one’s buying. You have to consider the time of year as well. Bernard says, “I don’t think one can justify charging more based on months, but there are certainly good and bad months to sell a car.”
“In general, before Chinese New Year is a good time to sell, as many buyers are looking for a new car for the new year. But the Hungry Ghost Month (the 7th month of the lunar
calendar – ed.) is a bad time, because of “pantang” (taboo).”
So if your car isn’t selling despite a decent price, don’t worry – it may turn around quickly in the coming months. Rob Hull from ThisIsMoney.Co.Uk also highlights the importance of timing when it comes to selling your car.
Non-seasonal factors like school holidays can affect the demand for used cars. You should wait for the months when people are not flying away on holidays and when they’re unoccupied with other occasions – don’t lower your price just yet!
4. Consider the market depreciation of your car
When pricing your car, consider the market depreciation rate. Jon from DrWealth.com explains that cars, like other assets, lose value over time because of the Certificate of Entitlement (COE).
When the COE runs out, so does the car’s lifespan, and that’s when you’re forced to renew the certificate or get rid of the car. The less your car depreciates over time, the better its overall value.
According to Bernard, “well-priced cars…have a lower-than-market depreciation value. This means the car is of good value, and the buyer is getting a bargain.”
You should calculate your car’s depreciation rate. If it seems lower than many other listings, be sure to highlight it to the buyer, and don’t budge from your asking price too quickly.
A low depreciation rate should be very attractive to your buyer, giving you enough leverage to stick with your asking price.
Pro tip: Use an online calculator for you to easily assess your car’s depreciation rate.
5. Change the price to match your urgency
“Ultimately, if you need to sell the car fast, the quickest way to do it is to price your car lower,” says Bernard, “so choosing how to price it is also determined by your urgency.”
Visit Carousell or other online car marketplaces and see the retail price of a similar model. You should set the price of your car about 10% lower than that reference point.
If you’re in no hurry, then do the opposite. Price the car higher if you can justify it, and only start to reduce the price if you haven’t seen interested buyers. 2 to 3 months is a good gauge when you should start to consider to reduce the price of your used car.
Summary of Steps to Price your Used Car:
Selling a used car can definitely be a challenging experience. With different buyers having different preferences, I’m sure that it can feel almost impossible for you to settle on the right price.
To make this process easier for you, I’ve compiled the 5 steps into a handy guide you can keep. You’ll never forget how to price your used car again:
Now you’re ready to set the perfect price for your car. Even though this process may take some time and effort, it’s definitely worth it. No more stress with blind price guesses, no more fuss with picky buyers.
If you haven’t already listed your car for sale, simply click on the button below to sell it today:
Have any friends or family struggling to set a price for their used car? Share this article to help them out now!
Next issue: 5 extra tips for first timers to sell their used car
Watch out for the next article that discusses extra tips for first timers to follow to help facilitate the sale of their used car. These tips will help you speed up the process.
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If you’re having trouble downloading the guide, here’s a recap for you:
1. Start by browsing the prices of similar cars on other listings as reference, looking out for extra features like after-market parts and cult status that can justify a price raise.
2. Check your car’s mileage. If it’s low, you can justify a higher price.
3. You might find that no one is looking to buy your car at a certain price, but don’t sell out for cheap just yet – consider what the market demand is like at the time of the year.
4. Price your car around your car’s total depreciation. The less the depreciation rate, the greater your car’s value!
5. Price your car depending on your urgency. If you urgently need to sell your car, don’t hesitate to set a lower price. Setting higher prices can sometimes be a luxury only those with time can afford.