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Who is responsible for pricing used cars and trucks?

Most people are aware that a new car’s value goes down immediately after driving it off the sales lot. This devaluation can be as high as 20 percent of the cost paid for the vehicle. This begs the question of what factors go into the final price when someone buys a used car or truck.

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If you have ever negotiated a purchase price for a used car, you probably have wondered who or what is actually responsible for determining the basic prices for used cars and trucks. We all want the best possible price we can pay for a used car or truck.

No regulation or rule determines costs.

Therefore, it is vital to understand how these prices are determined so that you know if you are paying a fair price or not. The price set for anything you buy is partially supply and demand, but there are many other factors that come into play when determining the prices for used cars and trucks.

While there are no actual rules or regulation on the place or person that determines a used car or truck’s value, there are some trusted players in how the price of used cars and trucks are determined.

These sources have helped to determine a fair value for used cars and trucks that are accepted by even the U.S. government.

Kelly Blue Book and Similar Sources

One of the most trusted sources of prices for used cars and trucks is the Kelley Blue Book. The Kelley Blue Book was developed in 1918 when a car dealer in Los Angeles, Calif. started making a list of used vehicles he wanted to buy from other dealers in the area. However, he needed price information to give to the banks and insurance companies in order to do so.

The Kelley Blue Book, as well as similar publications such as Edmunds, and NADA guides helps to determine the cost of used cars and trucks.

You can find these publications online and easily enter the year, make and model of a used car or truck and be given a range of accepted prices for that particular vehicle.

Several Factors Fall Into Play

Used vehicles’ prices are determined by analyzing things like the history of the vehicle, actual transactions on previous sales, the state of the economy, where you are trying to sell the vehicle, developments in the car and truck industry, and the season of the year you are trying to sell it.

You also have to take into consideration the age and condition of the vehicle, the brand, the mileage, if it has a history of being in an accident, and the options on the vehicle. These results are geared to represent all possible changes in the market place, so are well-trusted by both consumers and officials.

Another thing to keep in mind is that the dealership or other entities selling the used car or truck want to make a profit on the vehicle when they sell it. This means that they will try to price it at the highest value they can get for it so they will make the most money on the transaction.

Wholesale Auctions

Another place that plays a role in determining the prices people pay for used cars and trucks is the wholesale auctions with vehicles for sale. Dealers and wholesale agencies buy and sell cars and trucks at these auctions and then resell the vehicles at their stores.

When the cars and trucks are auctioned off, it is noted what the highs and lows are of what ends up being paid for certain vehicles. This plays a role in determining how much money the dealers will charge the customers when they resell the vehicles.

Other Factors That Play a Part

Other factors include whether or not the car model and brand has a good reputation or is popular or not. If so, that could make the price higher than a similar car or truck that isn’t of as high a quality in the consumer’s eyes.

Trends too play a big factor in determining the cost of used cars and trucks. For instance, these days smaller cars with better gas mileage are more popular since gas prices are so high. This means used cars and trucks that get better gas mileage may possibly be priced differently than those that don’t get good gas mileage.

Again, this is a sort of supply and demand that is common in selling any kind of consumer product, and cars and trucks are not that different. In truth, just like anything else, used car and truck prices are at least in part determined by the amount of money the buyers are willing to pay for them.

The bottom line is that if you are trying to buy a used car or truck, you should be aware that many different factors go into determining its cost. No one entity or person sets the accepted prices for used cars and trucks.

Instead, the price depends on how much a consumer is willing to pay along with factors listed above.

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So, if you are expecting to be buying a used car or truck, you should do your homework and research the prices ahead of time using things like the Kelley Blue book, as well as other accepted sources of information.