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Negotiate Better By Knowing These Top Factors That Influence Used Car Pricing
The Indian used car market has gained significant traction in the last decade. However, when it comes to pricing, several factors come into the picture for arriving at the right price. Apart from the inevitable factor of car depreciation, the factors driving the price up or down could be something as simple as the colour.

To help you understand this better and negotiate a better deal, we help you understand the top 5 factors that influence the price of a used car. So, let us take a look at them.
 

Top Factors That Influence Used Car Pricing

 
  • Mileage

    The total distance covered, that is kilometres or miles, is recorded on the vehicle’s odometer. The number is important because it can increase or decrease the resale value of a car. The lower the mileage, the higher will be the resale value and vice versa. The first major turning point, which would affect the prices, is when the odometer reaches beyond the 35,000 to 40,000 km mark. This is because most of the cars come with a bumper-to-bumper factory warranty that expires at either three years or 36,000 km, whichever comes first. Hence, anything beyond this milestone would mean higher maintenance. Thus, the greater the mileage, the higher the maintenance and service required, and factoring that into account lowers the price of the car.  
 
  • Brand

    The brand can have a significant impact on the price of the car. For instance, among four-wheelers, Maruti Suzuki generates higher footfalls. The popularity of the Maruti brand is stronger due to its mass appeal, value for money, and easily available body parts that are not exorbitantly priced. They maintain high resale value due to reliability and quality. The lesser-known brands do not fare well in the used-car market.
 
Also Read: Financing Your NEW Used Car
 
  • Age of the car

    It is a common notion that the value of the car depreciates with the age. In India, cars that are older than 15 years cannot be used on the road, but they can be transferred to a new state for re-registration. So, you must consider this factor if you are in the market for a used car. Generally, a car is reliable for up to five years, provided it has been maintained properly. A car that is older than that will cost you less, but you may have to spend more money on maintenance like repairs and replacing parts.
 
  • Appearance

    Generally, a car in good condition that is appealing to the eyes will generate a better value. Appearance matters a lot. A car whose engine and brake are working well, headlights and brake lights are in good shape, the stereo system is decent, and have no dents and scratches, will normally fetch a higher and better price. Moreover, the healthy condition is also a reflection of good maintenance of the car. 
 
  • Colour

    The colour of the car plays a significant role in influencing the price of the used car. For instance, cars with colours like silver, red, blue and white are popular and would demand a higher price. On the other hand, cars that have black or dark blue shade would fetch a lower price because even the small scratches are easily visible on the body shell.
 
Also Read: Points to Consider Before Taking a Used Car Loan
 

Some other factors that influence the used car price

 
  1. Modifications

    Modifications can either raise or decrease the resale value of the car. It is one of the most crucial factors that affect used car pricing. You must be aware of the alterations that increase the car's performance. And also, the modifications that are illegal in the country/state. 
     

    Modifications that improve performance

     
    • Medium/hard compound tyres
    • Performance exhaust system
    • Chassis bracing
    • Anti-roll bars
    • Suspension that is lower and stiffer
    • Iridium spark plugs
     
    If the used car looking to buy has any of the above changes, your used car negotiation skill would hardly work here.
     

    Modifications that lower the performance

     
    • Large spoilers
    • Using cheap/poor condition aftermarket alloy wheels
    • Ultra-wide tyres
    • Pipes without tuning
    • Cheap air filters
     
    If you are looking to save money on transportation, you don't want to get a car that does not perform well. Apart from the changes listed above, several alterations are prohibited in India. So, if the modification is illegal or has a negative influence on performance, negotiating a car deal will be a lot easier.
     
  2. Sales channel

    There are various sources through which you can purchase a used car. Some of them include certified dealers, individual sellers, and a manufacturer's used car showroom. The price varies greatly with each seller. For example, prices may be high if you are buying from a dealership because the commission is involved here. However, you might save on the middlemen commission if you buy from a private seller or a manufacturer's showroom. But contrary to this, buying a car from an individual seller may not guarantee you a decent condition vehicle.

    So, while determining the second-hand car valuation, keep this point in mind as well.
     
  3. Ownership

    Ownership also determines the cost of the vehicle. If a car has been sold numerous times in the past, it is assumed that it has experienced more wear and tear than a car that has not been involved in a resale transaction.
     

 

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Also Read: Essential Guide for Buying a Used Car
 
  1. Purpose of the car

    A car can be used either for personal use or commercial use. If you are buying a car that a seller has used for his personal use, you don't need to be as cautious. And, you may quickly learn about its condition by having a test drive. However, if you are buying a commercial vehicle that was formerly used in the tour and travel industry, you should be wary of its condition.
     
    If you are wondering how much to negotiate for a used car that has been used for a commercial purpose, get the assistance of a mechanic to help you arrive at a fair price.
     
  2. Car documents 

    Avoid paying a high amount for a car that lacks important documents. You should be cautious if the seller does not have the original registration certificate, insurance papers, or service record book. These documents are crucial in determining the price of a car. The RC can assist you in determining whether or not the vehicle is legally owned. You may get a good idea of the car's condition by looking at the insurance and service records. You should also check the road tax receipt and request the original purchase invoice from the seller.
     

To conclude


The above-mentioned factors can help you choose a used car that fits your budget and meets your need. Knowing them can also help you in making an informed decision the next time you plan to buy a car.
 
Disclaimer: This post was first published on 20 August 2020 and has been updated for the latest information, freshness, and accuracy.

 


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Did You Know

Disbursement

The act of paying out money for any kind of transaction is known as disbursement. From a lending perspective this usual implies the transfer of the loan amount to the borrower. It may cover paying to operate a business, dividend payments, cash outflow etc. So if disbursements are more than revenues, then cash flow of an entity is negative, and may indicate possible insolvency.

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