Any car is a huge deal for everyone. Whether a new or a second-hand vehicle, it is one of the most important investments for any car owner. From buying to selling a car, everything needs proper research. For example, a car’s price depreciates a few years after buying. So, if someone wants to sell a used car, knowing its fair market price and blue book value is essential.
But when understanding a car’s market or blue book value, one must know the difference between the two. So, this article will discuss the difference between a car’s fair market value and blue book value.
- How and Why Are Fair Market Price and Blue Book Value Different?
- How to Calculate Blue Book Value
How and Why Are Fair Market Price and Blue Book Value Different?
Fair market value and blue book are different when it comes to presenting a car’s value as accurately as possible. Not only their definition but also the factors influencing the value of a car are essential. So, here are the differences showing how fair market price and blue book value are different.
What Is Fair Market Value?
Whenever someone wants to buy something, its price is the first thing to take care of. Proper research goes into understanding an object’s current price or worth. The same goes for cars too. Since a car is the second big investment after a house, it has a strong Fair Market Value.
FMV or Fair Market Value refers to the price required for selling or buying an asset like a car. Due to FMV’s authenticity, various institutions like Government-run organizations and NBFCs use the Fair Market Value to present the accurate price of any taxed asset, especially cars.
What Is Blue Book Value?
The Blue Book Value is one of the most trusted ways to check car valuation online before selling. The Blue Book Value also called the Kelley Blue Book, which lists the values of used and new cars.
Depending on a car’s depreciation rate, demand, and supply, Kelley’s Blue Book offers the value of cars, and it has been doing so since the 1920s.
2. Factors Influencing The Value of A Car When It Comes to Fair Market Value
Any buyer or seller has full knowledge of the possible factors that influence the value of a car while calculating the Fair Market Value. Here are some of those:
A. The Make and Model
A car’s model and manufacturer are two of the most important factors for considering a car’s Fair Market Value. The buyers do not trust any car from a not-so-reliable brand. But some of the most trusted car manufacturing companies are brands like Toyota, Hyundai, Suzuki, BMW, Mercedez, etc. That is why the cars from these companies come with better engine performance, interior and exterior, making the car’s Fair Market Value very high.
B. Depreciation Status
Any used car starts to depreciate its value three years after use. Since its interiors and exteriors start to become a little old and less functioning, the depreciation status of the car changes. The more the depreciation rate, the less money a seller will get after selling the car. That is why most sellers start to find the Fair Market Value of a used car after using it for five years.
Just like the interior of a car, a car’s exterior is also essential to get a good Fair Market Value. The car which has no major issues, has no scratches or old paint, etc., is considered to have a good exterior. In simple words, the car’s exterior features should not have any rust, and they should be in perfect working condition.
Also read: Ultimate Fixing & Selling Your Car Checklist
Factors Influencing The Value of A Car When It Comes to Blue Book Value
Kelley’s Blue Book, one of the most reliable car value presenting sites, is trusted by various buyers and sellers. Some factors influence the value of a car when it comes to presenting its value using the Blue Book. Some of them are as follows:
A. Body Style of The Car
A car is one of the most fast-changing objects, and its design greatly matters. Any car with a good body style or design is one of the most promising cars ever. However, while the car’s design should be unique, it should also be equipped with advanced technology, one of the most turning factors when deciding its worth, according to the Blue Book.
B. Engine Size
A car’s engine is the one thing that keeps a car going for many years. It is one of the most sought-after things when buying or selling a new or old car. Based on the car’s manufacturer and model, a car is equipped with a strong engine, which determines its value.
Mileage is a great deciding factor when trying to get the most accurate value of a car. How much a car has been driven or how much a car can be driven decides the car’s worth in the Blue Book. For example, if a used car has been driven for over a lakh kilometers, its Blue Book value will be much less than the other cars. So, check the car’s mileage to get the right Blue Book value.
3. How to Calculate Fair Market Value
There is no specific way of calculating the Fair Market Value of a car, although the car’s features, make and model are properly assessed while presenting its true value. After determining the car’s functionality and usability, its Fair Market Value is determined.
Also read: What Is A Comprehensive Insurance Policy
How to Calculate Blue Book Value
Blue Book offers a list of some car’s prices, presenting the Blue Book Value of the car. It also assesses a car’s present condition, engine, mileage, exterior and interior; based on that, the Blue Book lists every car’s market price. However, the price may vary depending on various dealers or private sellers.
A car is one of the most sought-after things by many people. So, whether you are a seller or a buyer, having the right knowledge about a car is of utmost importance. So, follow the difference between the Fair Market Value and Blue Book Value and choose which way you want to use to decide the market price of any car.