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The value of a car depends on a lot of factors, from the make and model to age, condition, and mileage. How quickly you want to sell and where you live can also play a big part in how much money you get for your car.

It’s important to understand these factors as you appraise your vehicle. Here’s a closer look at resources you can consult as you determine how much your car is worth.

What Is a Good Price for My Used Car?

In 2023, the average used car price hovered around $29,000. Whether you’re able to sell your car for above or below that price will depend on a lot of things. First of all, mileage has a big impact on price. The more you’ve driven your car, the less it will be worth.

A car’s condition is also important. Are there repairs that have to be made or parts that need replacing? Does the car have an accident history? If so, the value of the car may be negatively impacted.

The older a car is, the more wear and tear it’s likely to have experienced. As a result, older cars usually cost less than newer counterparts.

Some factors that can impact car price are more surprising, such as where you live and how quickly you need to sell it. The weather in your area can take its toll on your vehicle. Harsh New England winters and salted roads, for example, can cause metal components to rust. Sunny climes have their own issues; too much sun can cause paint and other finishes to lose their luster.

Last, if you need to sell your car quickly, you may find yourself accepting less money than you would have if you’d the time to wait for a buyer willing to pay full value.


💡 Quick Tip: When you have questions about what you can and can’t afford, a spending tracker app can show you the answer. With no guilt trip or hourly fee.

Understanding the Different Estimated Values

There are a few different ways to calculate estimated car value. (Keep in mind, these terms apply only to cars you own outright; different calculations go into valuing a leased car.) Here’s a look the most common terms:

Market Value

The market value of a used car is a reflection of how much buyers are usually willing to pay for a given vehicle. It will depend on factors such as location, make and model, mileage, and condition. See below for resources to determine market value.

Recommended: How to Save Up for a Car

Trade-In Value

Trade-in value comes into play when you’re considering buying a used car or a new vehicle. It’s the amount of money a dealer is willing to give you for your old car that you can then put toward the purchase price of another vehicle.

The trade-in value is often lower than top market value. That’s because the dealer needs to turn a profit when they resell the vehicle.

If you’re trading in your car for a new or new-to-you model, your credit score will impact how much your next car really costs including interest. There is generally no baseline credit score required to qualify for auto financing, but lower scores will pay significantly higher interest rates. Similarly, higher credit scores will get better deals on auto leasing.

Recommended: What Credit Score Is Needed to Buy a Car?

Private Party Value

You may encounter the phrase “private party value” as you research how much your car is worth. This usually means the fair market value when selling your vehicle to an individual rather than a dealership.

Instant Trade-In Dealer Quotes

Brick-and-mortar dealerships and websites, such as Kelley Blue Book, Vroom, TrueCar, and Carvana, may offer instant cash or instant dealer trade-in quotes.

The process is similar to looking up the value of your vehicle online. You often need to share only a few details about your car, such as vehicle identification number (VIN) or your license plate number, and the company will come back to you with an offer of cash for your car.

Once you receive an offer, there will likely be an in-person follow-up to review your vehicle before you receive any money.

Recommended: What Is The Difference Between TransUnion and Equifax?

Common Car Value Estimate Resources

There are a variety of resources available where you can research car prices and estimate the value of your vehicle.

Kelley Blue Book

The Kelley Blue Book, or KBB for short, is an online resource for finding the value of new and used vehicles. It dates back to the 1920s, when the company published an actual blue book dealers would look at to establish pricing information and car values.

To research your car’s value, you can provide your vehicle identification number (VIN), license plate number, or year, make, model, mileage, and zip code. You can also input the equipment that is included on your vehicle and the color of your car to further narrow down the value.

Black Book

Similar to the KBB, Black Book offers VIN-specific valuations. However, it also integrates vehicle history report data from Autocheck, such as reported damage to the vehicle. The company then offers an adjusted valuation based on this information.

National Automobile Dealers Association

The National Automobile Dealers Association (NADA) provides resources for shoppers looking for new and used vehicles. Use the website to compare prices on similar vehicles to your own to help determine what the going market rates are. The company also provides shopping guides that can help you learn more about the car buying and selling process, and glean tips for what buyers are looking for in a used vehicle.

Edmunds

Edmunds offers an “Appraise My Car” tool that also allows you to search vehicle values by VIN, license plate number, and year, make, and model. The California-based company was founded in 1966 “for the purpose of publishing new and used automotive pricing guides to assist automobile buyers.”

Who Gives the Most Accurate Car Value Estimate?

Kelley Blue Book and Edmunds are two of the most widely used and trusted general reference sites when it comes to valuations of particular makes and models of used cars and trucks.

Each site may show different values for the same vehicle, but no site consistently provides higher or lower estimates than the other.

Car Brands With the Highest Resale Value

The brand of a car, also known as its make, can have a big impact on resale value. Some makes are more popular than others, often due to a reputation for safety, fuel economy, or durability.

According to research by iSeeCars, the following 10 cars had the lowest depreciation in 2023.

	Make and Model	5-Year Depreciation
1.	Porsche 911	9.3%
2.	Porsche 718 Cayman	17.6%
3.	Toyota Tacoma	20.4%
4.	Jeep Wrangler/Wrangler Unlimited	20.8%
5.	Honda Civic	21.5%
6.	Subaru BRZ	23.4%
7.	Chevrolet Camaro	24.2%
8.	Toyota C-HR	24.4%
9.	Subaru Crosstrek	24.5%
10.	Toyota Corolla	24.5%

💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

Importance of Add-On Options

Pricey add-ons, such as splash guards, alarm systems, and tinted windows, don’t always add value to used cars. In fact, once a car is two or three years old, they may have little effect on value at all.

Recommended: Does Net Worth Include Home Equity?

The Takeaway

The value of your car will change from year to year as it ages, and supply and demand shift. Staying on top of your car’s value can help you make informed decisions about your net worth, as well as decisions about when to sell or trade in your vehicle for a new car.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

With SoFi, you can keep tabs on how your money comes and goes.

FAQ

How do you estimate the value of a car?

You can estimate the value of your vehicle using online tools such as Kelley Blue Book, Edmunds, or Black Book.

How do I find the fair market value of my car?

You can estimate the fair market value of your vehicle using online tools such as Kelley Blue Book, Edmunds, or Black Book.

What is the difference between market value and fair market value?

Fair market value is an estimate of what a potential pool of buyers might pay, while the market value is what they are actually willing to pay.

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Photo credit: iStock/DjordjeDjurdjevic

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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If you’re lucky enough to find yourself in possession of a bundle of cash that isn’t immediately needed to pay bills, you have some thinking to do. How to use that money? Whether it came your way via an on-the-job bonus, an inheritance, or an unexpected refund, you have the opportunity to put it to work for you in a variety of ways.

Instead of going on a shopping spree, you could deploy the funds to improve your financial situation and build wealth. Options include paying down debt, contributing to retirement goals, and beyond. Read on to learn the full story.

The Opportunity of Extra Money

At some point, you may find some extra money heading your way. Perhaps you get a bonus for wrangling a complicated project at work. Or you didn’t realize that you’d overpaid your taxes one year. Or maybe an inheritance comes your way.

When funds turn up that you weren’t expecting, it may be tempting to buy a bunch of cool items you’ve been admiring or to take friends and family out to a lavish meal or away for a weekend. But then, once that cash is gone, there’s no getting it back.

Instead, you might look at the money as a means to enrich your financial standing. (Or use most of it that way, and go shopping with a small amount of it.)

A windfall can be a once-in-a-blue-moon opportunity to pay off debt or plump up your emergency fund. It can help you boost your retirement savings or kick your savings for a future goal into high gear.

Yes, it takes discipline to put that money to work vs. splashing out with it at your favorite store. But doing so can have a long-term positive impact on your finances.

1. Build a Solid Emergency Fund

If your emergency fund is low (or nonexistent), you might use your new windfall to build it up.

Having an emergency fund gives you a financial cushion, along with the sense of security that comes with knowing you can handle a financial set-back (such as a job loss, medical expenses, or costly car or home repair) without hardship.

Having this buffer can also help you avoid having to rely on credit cards for an unexpected expense and then falling into a negative spiral of high interest debt.

How Much to Save in an Emergency Fund

A general rule of thumb is to keep three to six months’ of monthly expenses in cash as an emergency fund. Two-income households may be able to protect themselves with three months’ worth of savings. If you’re single, however, you may want to aim closer to having six months’ worth of living expenses saved up.

Consider keeping your emergency fund in a separate high-yield savings account, such as a money market account, online saving account, or a checking and savings account. These options typically offer higher interest rates than a standard savings account, yet allow you to access the money when you need it.

2. Tackle High-Interest Debt

While mortgage loans and car loans tend to offer lower interest rates since they’re secured by collateral, the same can’t be said of unsecured debts, such as credit card balances, student loans, and personal loans. Credit card debt can be especially hard to pay off, given that the current average interest rate is over 20%.

If you carry any credit card or other high-interest debt, you might want to use your windfall to jumpstart a strategic debt payoff plan, such as the debt avalanche or debt snowball method, in order to pay it off as quickly as possible.

Strategies for Paying Down Debt

The avalanche method involves ranking your debts by interest rate. You then put any extra money you have towards paying off the debt with the highest interest rate (while continuing to pay the minimum on other debts). After the balance with the highest interest rate has been completely paid off, you move on to the next highest interest-rate balance (again, putting as much money as you can toward it), and then move down the list until your debt is repaid.

With the snowball method, you focus on paying off your smallest debt first (while paying the minimum on your other debts). Once that balance is paid off, you take the funds you had previously allocated to your smallest debt and put them toward the next-smallest balance. This cycle repeats until all of your debt is repaid.

Using your extra cash to pay off debt has added benefits. You may build your credit score as your credit utilization ratio (the amount of available credit you’ve used vs. your credit limit) goes down.

In addition, once you clear your debt, you won’t have to budget for debt payments anymore, which is essentially getting extra cash all over again.

3. Invest in Retirement Accounts

Here’s another idea for what to do with extra money. You might use it to grow your retirement accounts. There are a couple of options to consider here.

401(k) and Employer Match

Does your employer offer a 401(k) with matching contributions? If so, this can be a powerful tool to help you save for retirement.

Not only does a 401(k) help lower your taxes (since this money comes out of your salary before taxes are deducted), your employer’s matching contributions are essentially free money and can provide a nice boost to your retirement savings.

If you’re not currently taking full advantage of matching funds, you may want to adjust your contributions to help ensure you’re making the most of this benefit. And if a windfall comes your way, you may want to deposit it right into your account.

Start or Fund an IRA

What do you do if you don’t have a company plan or you’ve hit your contribution limit there? You might consider using your new influx of cash to open up (or add to) an individual retirement account (IRA).

While retirement may feel a long way off, starting early can be a smart idea, thanks to the magic of compound earnings (that’s when the money you invest earns interest/dividends, those earnings then get reinvested and also grow).

There is also a possible immediate financial benefit to investing in an IRA: Just as with a 401(k), your IRA contributions can possibly reduce your taxable income, which means that any money you put in this year can lower your tax bill for this year.

You’ll want to keep in mind, however, that the federal government places limitations on how much you can contribute each year to retirement funds.

Recommended: IRA vs. 401(k): What’s the Difference?

4. Explore Additional Investment Options Money

A little windfall can offer a nice opportunity to buy investments that can possibly help you create additional wealth over time.

Stock Market Investments

For long-term financial goals (outside of retirement), you might consider opening up a brokerage account. This is an investment account that allows you to buy and sell investments like stocks, bonds, and funds like mutual funds and exchange-traded funds (ETFs).

A taxable brokerage account does not offer the same tax incentives as a 401(k) or an IRA but is much more flexible in terms of when the money can be accessed.

Though all investments come with some risk, generally the longer you keep your money invested, the better your odds of overcoming any down markets. Your investment gains can also grow exponentially over time as your earnings are compounded. Worth noting: Past performance doesn’t guarantee future return, and while your money may be insured against broker-dealer insolvency, it is not insured against loss.

While investing can seem intimidating, a financial planner can be a helpful resource to help you create an investment strategy that takes into consideration your goals and risk tolerance.

Real Estate Investments

Another option might be to look into real estate investments. One possibility: REIT investing, which stands for Real Estate Investment Trust. This is a kind of company that operates or owns income-generating properties.

You can buy shares of REITs as a way of investing in different aspects of the real estate market, and you can do so for small amounts vs. buying an actual property. In this way, REITs can make it possible for people to affordably invest in real estate projects, including those involving large-scale construction.

5. Save for Future Goals

Still wondering what to do with extra money? If you already have a solid emergency fund and your retirement account is growing nicely, you may want to think about what large purchases you are hoping to make in the next few years. That could be buying a new car, accruing a down payment for a home, doing a renovation project, or going on a family vacation.

A lump sum of cash can be a great way to jumpstart saving for your goal or, if you’re already saving, to quickly beef up this fund.

Short-Term vs. Long-Term Goals

When thinking about goals, it can be helpful to divide them into short-term goals and long-term ones. Typically, short-term goals are ones you want to achieve within a year, while long-term ones are those that have a longer runway to save.

So a short-term goal might be saving for a vacation next year, and a long-term one could be accumulating enough money for a down payment on a property.

Creating a Savings Plan

For things you want to buy or do in the next few months or years, consider setting up multiple bank accounts so you have a separate savings account that is safe, earns competitive interest, and will allow you to access the money when you’ve reached your goal.

Some good options include a high-yield savings account at a bank, an online savings account, a checking and savings account, or a certificate of deposit (CD).

Keep in mind, though, that with a CD, you typically need to leave the money untouched for a certain period of time or else pay a penalty.

The options directly above may also be a good place to put your extra money as you save up for a longer-term goal. But you might also look into whether there are suitable investments (see #4 on this list) that involve a bit more risk but offer potentially higher reward.

The Takeaway

Wondering what to do with a lump sum of extra money is a good problem to have.

Some options you might want to consider include: setting up an emergency fund, paying down high-interest debt, starting a savings account earmarked for a large purchase, or putting the money into your retirement fund or another type of long-term investment.

If you are looking for a place to bank your funds for a future goal, compare account features, such as the annual percentage yield (APY) offered and fees assessed.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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