As a car owner or lessee, knowing your car's value is, well, more valuable than ever. Given a relative lack of inventory, arising from supply chain backups, demand for vehicles seems to be at a historical high. If you’re thinking of selling the car you’re currently driving, or trading it for a new one, you may have more leverage in the deal than car owners have ever had before.
This unusual dynamic, created by COVID, microchip shortages and other factors, is affecting the value of both new and used cars. In fact, according to a February 2022 report by the U.S. Bureau of Labor Statistics, the average cost for new cars is up 12.4 percent and used cars is up 41.2 percent.
In today’s environment, cars as a whole are holding their value much longer than they have historically. Consequently, car owners have more leverage than normal when it’s time to sell or upgrade that old car for a new one.
Estimating your car’s value
Now that you know the average, relative cost increase for both new and used cars, you may be curious about your own car’s current value. Some of the major factors that will influence the value of your car are the age, mileage and condition.
You can reach out to your trusted dealer, who is already familiar with your make and model, for an estimate. Alternately, you can research your make and model’s value online and adjust your search variables according to your car’s mileage, condition and upgrades to be sure you get an accurate number. Chase Auto offers a free service to existing customers that allows you to upload your current car to get your estimated trade-in value. Log in to Chase.com/mycar to easily upload your vehicle and see your car’s value. Then, with an estimated value in hand, you can start to investigate if and how to move forward.
What to do with a car you own
If you own your car, here are some interesting options to keep in mind:
- Trade-in your car. If new cars are up about 12 percent, but used cars are up about 40 percent, year on year, this difference in inflation suggests buying a new car could be a relative bargain if you can find one you like in current inventories.
- Sell it and walk away. If you no longer need your car, you can sell it to a dealership or a private party and capture more in the sale than you normally would, while prices are relatively high.
- Keep it a little longer. Because of the inflated costs of new cars at about 12 percent on average, and a lack of inventory due to supply chain issues, it may be hard to find another car you like that’s in your budget. You can try riding out the inflation and waiting for costs to level-off or come down a bit. (But, of course, there are no guarantees that they will.) Some auto manufacturers are allowing buyers to pre-order their cars because of low inventories and are even offering discounts to do so.
What to do with a car you lease
If you lease your car, following are some useful approaches to weigh.
- Apply your old lease to a new lease: If your leased car is worth more today than its predicted residual value, your dealer may be able to apply the difference toward a new lease.
- Buy-out your leased car: You may be able to “buy-out” your lease based on the predicted residual value. If that’s the case, you may be able to purchase the car at a relative discount from its current value. Once it’s yours, you can hang on to it or sell it at a premium.
- Extend your lease: Your dealer may be inclined to extend your lease based on your existing terms, possibly for up to 12 months, while you decide what to do about your next car, or wait for your preordered car to arrive.
The bottom line
Supply chain delays and inventory shortages have been driving up the value for both new and used cars like never before. Whether you own or lease, this moment provides a unique set of options to be aware of, and maybe even take advantage of.