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4 Most important factors impacting used car price Usually, the price of any commodity or vehicle is defined by its supply and demand. The same should apply to Cars as well but only to some extent and not all. Example: In hot summer more people want to sell their two-door convertible, so in that season when the market is flooded with 2-door convertibles then it will definitely fetch a little lower price. Though this impact is negligible but it’s noticeable. This point alone can help you majorly in finding if your perfect car can actually fit in your car buying budget after seeing its real worthy price and not the inflated price. The car prices that you see on the online classifieds website are not quite right as every seller prices their vehicle depending on the urgency they are in to sell it. Some sell it at undervalue and some sell it at right value or overvalue if they decide to wait for a few days or a week. To find a perfect car buying price, you need to understand that it depends on four major factors combined together to create a perfect resale value: Age, Mileage, Options and Condition. Age: Every car depreciates majorly as per their age factor roughly as per the below table. This further gets complicated based on the car manufacturer region means European and UK Cars will depreciate the most, and then comes the American and Korean brands and then the least depreciation will show up in Japanese cars. Luxury Cars: 20% depreciation for the first year and then 15% depreciation every year. Sports Cars: 20% depreciation for the first year and then 15% depreciation every year. SUV and Crossover: depreciation for the 15% first year and then 12% depreciation every year. Family Sedans: 15% depreciation for the first year and then 10% depreciation every year. Compact Cars: 15% depreciation for the first year and then 12% depreciation every year. The below example will show how to apply the depreciation on year by year rate: 2009 Model luxury car whose price was 100,000 now valued at 35,496 in 2016. 2010: 20% of 100,000 = 20,000 valued at 80,000 2011: 15% of 80,000 = 12,000 valued at 68,000 2012: 15% of 68,000 = 10,200 valued at 57,800 2013: 15% of 57,800 = 8,670 valued at 49,130 2014: 15% of 49,130 = 7,370 valued at 41,760 2015: 15% of 41,760 = 6,264 valued at 35,496 Mileage: After the age, mileage is the second biggest contributor to the value of the car. On average industry consider 18,000 – 20,000 km driving in a year. So you need to check the math with the number of years old and see if it falls in the industry bracket. Although there is no set rule that how much is too much, but you can factor some plus or minus on the final value based on the current mileage of the car. Let’s take the above example 2009 car and in 2016 it should be in the range of 108,000 – 120,000 Km. So if the actual car has 200,000 km driven means it's 80,000 km overdriven, so for every 10,000 km you can minus (if it’s more driven) or add (if it’s less driven) 2-3% on the above depreciated final value. Example: 35,496 x 2% = 710 x 8 = 5,680 (less) OR 35,496 x 2% = 1,065 x 8 = 8,520 (less) Means: 35,496 – 5,680 = 29,816 OR 35,496 – 8,520 = 26,976 for a 200,000 kms driven car. Options: Actually this point should not even exist here if you get the right model and right option price to start the math at first. However, many times you aren’t really able to get the Full options, Mid Options, and Base option pricing after 3-4 years of age. So as a best practice find out the current difference in the percentage of the same model and apply it to the final depreciated value. The reason for this exercise is as Japanese and Korean Cars have very minimal percentage difference (5-10%) between full options to the base models, whereas Germans, European and American cars have huge differences close to 20-30% from the base models. Condition: Last but not least, can heavily dictate the final pricing as Car has a lot to do with the proper maintenance and if the previous user was not maintaining it according to the maintenance schedule then the next buyer will suffer heavily. This condition implies to the general exterior and interior condition plus service maintenance condition. Remember the above math was for average wear and tear car as per its age. So if you come across a super clean car with full dealer service history feel free to bump up 5-7% on the final depreciated value as after all you need to thank such good car owners and vice-versa in the negative condition.