All About Resale Value: How It’s Determined and Why It Matters

October 13th, 2023 by

A white 2016 Chevy Malibu is shown from the front at an angle.

Buying a new vehicle typically means considering many different factors: the make and model you want, safety and convenience tech, fuel economy, and—quite obviously—cost. You’ll likely find yourself googling “sell my car” to find out how much you can get for your current ride.

A lot of people don’t often think about their vehicle’s resale value until it’s time to sell it. Resale value is helpful to know since it tells you how much money you can reasonably expect to get for your used vehicle when you go to sell it. You not only want to know your current vehicle’s resale value but also how well your new purchase will likely retain its value.

This is certainly a critical consideration since resale value significantly impacts the long-term cost of owning a vehicle. Before you come to Edwards Chevrolet Downtown, get familiar with how resale value is determined and why it matters.

What Is Resale Value?

Resale value—also referred to as residual value—is a vehicle’s future estimated worth. When you go to sell your car a few years down the road or decide it’s time to trade it in, you will be given an estimated value.

You will see resale value expressed as a percentage of your auto’s original cost. This percentage lets you know the amount of money you can expect to recover when you go to sell the vehicle. For example, if you purchase a Chevy for $30k and it has a resale value of about 60% after three years, you can expect to get around $18k should you sell it or trade it in down the road.

A red 2020 Chevy Equinox is shown from the front at an angle.

Which Factors Play Into Resale Value?

Now that you know what resale value is, it’s time to dig in and learn about different factors that help determine it. Vehicle-specific factors and external factors comprise two primary groups and have their own sub-group factors that also warrant some discussion.

Vehicle-Specific Factors

There are multiple factors specific to a particular vehicle that influence its resale value. First and foremost, the make and model are key since some vehicles are known to retain their value better than others over time. For example, Chevys are known to have strong resale value. Your car’s overall condition—as well as how many miles are on its odometer—has a high influence over resale value. Regular service and maintenance (and going the extra mile to keep your vehicle in good shape) leads to a higher resale value.

The features and options equipped on your vehicle also impact its resale value. If your car has popular features, it could rake in more cash on the used market. Its age is further influential since newer vehicles have higher resale values. Of course, depreciation varies among models, so this might be truer for some vehicles than others.

Finally, and quite surprisingly, the color of your vehicle can affect resale value. More buyers like neutral tones, so those usually fetch a higher price at the time of resale. Flashier colors are not as universally appealing, so those vehicles might have lower resale values.

External Factors

Let’s switch to discussing external factors since those can also be pivotal. One significant suggestion is to pay attention to the economy since it seriously impacts resale values. When there is an economic downturn, prices for used cars tend to drop as buyers must be more mindful of their budgets. Fuel prices also warrant consideration since rising costs make fuel-efficient vehicles more attractive, thereby increasing their resale value.

What is the market demand for a certain vehicle on the used market? That can be a huge factor. Keeping with the fuel-efficient trend, if hybrids are in high demand when you sell a used one, you might find it will have retained its value better than less-efficient models. You can also potentially get a better resale value based on equipped technology and safety features since

How Is Resale Value Determined?

Here’s where math gets involved. Industry experts can provide you with exact estimates based on complex calculations. Methodologies can vary between different financial institutions, but there are a few core concepts about resale value determination that you should know.

First, experts collect huge piles of data, including info on auction results, historical sales, and market trends. Information specific to every single vehicle—by make, model, trim, and options—can even be considered. Experts will analyze the automotive market at large, factoring in economic statuses, supply and demand, and fuel costs.

An expert then takes a specific vehicle into account, noting its mileage, condition, age, and equipped features. Historical resale values might also get factored in, depending on the vehicle. Future projections are then made about how a car’s value will likely alter over time.

Experts also look at a vehicle’s residual percentage, which is then utilized to calculate its future value after a certain number of years or miles. Resale value information usually gets pushed on an annual or semi-annual basis and is distributed to dealerships like ours and consumers alike. Of course, different places use various methods and criteria to determine resale values, so it’s important to check out at least a few sources for resale values to find the average estimate.

A yellow 1978 Chevy Camaro Z28 is shown from the front at an angle after researching how to 'sell my car'.

Why Does Resale Value Matter?

Resale value has a lot of power for someone looking to buy a car and sell their current one. Resale value matters because it impacts an auto’s overall ownership cost. Vehicles with high resale values tend to have smaller depreciation costs, which makes them cost-effective over time. You also must consider a vehicle’s financial flexibility when you go to sell or trade your vehicle; this means you get more equity toward your next vehicle, which might lower your monthly payments.

There are bonuses to making the right upgrades on a vehicle, too. Making regular upgrades lets you get more value from it if the updates are things that buyers want—especially tech or safety features currently in demand.

Knowing a vehicle’s resale value is important if you’re shopping on a budget. You’ll know approximately how much you can recover when you go to sell, and you get some peace of mind knowing that your investment will hold its value over time even as you tack on the miles. Owning something with solid resale value can give you a lot of confidence when you go to offload it. If you know your vehicle has reduced depreciation, you can rest assured that you’ll have a higher resale value and will have a lot less money over time.

Valuation at Edwards Chevrolet Downtown

So, how does resale value apply when you buy from Edwards Chevrolet Downtown? Chevy is a long-established and reputable brand known for delivering strong resale values, making Chevy a wise investment. There are many great models to choose from here at our dealership, ranging from compact cars to full-size SUVs, and you’re sure to get a high resale value from your choice.

Chevy pads their vehicles with advanced infotainment and safety tech. These beef up your ownership experience and will make your vehicle more attractive on the used auto market. Chevy has fuel-efficient models, too, with hybrids and all-electric options like the Bolt; whenever gas prices are on the rise, you can bet these vehicles will show higher resale value. Moreover, Chevy is known for creating durable and reliable vehicles that can work well for many years.

Carefully Consider Resale Value When You Shop for Your Next Vehicle

Should you have any questions or need more clarification on resale values, our team of seasoned professionals can help you. Choosing a Chevy from Edwards Chevrolet Downtown means you get something truly capable and innovative that also sets you up for a high resale value down the line. No matter what kind of vehicle you’re looking for, we have a solid choice for your present and future needs.

Posted in Sell My Car