Is Your Used Car Worth More Money Than You Think?

Buying a car is extortionately expensive right now, but there is a silver lining. Your used car may be much more valuable than you think. The price of used cars is increasing faster than new cars, and experts are letting people know.

Why Are Cars So Expensive Right Now?

  • The Computer Chip Shortage
    If you haven’t already been affected by the automotive chip shortage, chances are you will in the future. Currently, there are tens of thousands of cars sitting on lots and waiting for chips, a result of automotive factories being forced to idle production for the time being.
    The growing demand for computer chips has outstripped the supply. While automakers and electronics companies continue to need a significant amount of chips, semiconductor manufacturers can’t keep up.
    As chip producers grow and increase their output, the main focus tends to be on the latest technology, leaving chips for traditional, gas-powered cars even more scarce.
  • What Is a Semiconductor Chip?
    Though its name may be deceivingly confusing, a semiconductor chip is simply a computer chip or an integrated circuit. The semiconductor is made out of an electrical conductor- silicon, while the chip is essentially an electric circuit with varying components such as transistors, wiring, and silicon wafer.
    Over time, chipmakers have wired to produce chips that are smaller and more powerful, lowering costs and even improving profits and performance. Though these improvements are remarkable, it also means that making them is more difficult and time-consuming.
  • Why Do Cars Need Them?
    Cars depend on chips more than ever because they are essentially becoming computers on wheels. Everything from their newer applications, driver-assist systems, and even fuel economy improvement rely on these chips to actually work.
    Though hybrid and electric cars typically need more chips than traditional cars, gas-powered vehicles still use chips that are older and lower-tech. Unfortunately, these types of chips are harder to come by than the newer, more advanced chips.

Are Automakers Doing Anything to Help?

Automakers are doing their best not to lose money and are therefore going to great lengths to try and manage the chip shortage.
A large amount of prioritization has been placed on using the chips that are available in their most popular and profitable vehicles. Currently, there has been a temporary pause in the production of less popular models, even shutting down some factories until more chips become available.
Some companies like Ford and Tesla have begun removing chips from their vehicles. While these vehicles can still be delivered to customers, some of these chips or pertinent parts will be installed at a dealer or service center when they’re back in stock. In other cases, chips and enhanced vehicle features were eliminated entirely.
Until necessary parts are installed in cars, many carmakers are parking their vehicles on their lots, filling them up to their maximum capacity.
A handful of automakers are going to drastic measures by making notable changes to vehicles and doing away with scarce, older chips, and moving forward with newer ones. Unfortunately, making such a big change in the middle of a vehicle’s production is very difficult, causing new issues.

When Will the Chip Shortage End?

Unless there is a sudden drop in demand, the chip shortage will not be over anytime soon. According to J.P. Morgan Research, Semiconductor companies are in a unique situation in that they are constrained by supply, not demand. In order to meet this demand, they are increasing capital expenditure. Even though this is the case, most industry executives are concerned that the shortage will continue into 2023.

How to Check the Value of Your Existing Car:

Used cars are booming right now, so how do you find their true value? In the end, the real price of your car is ultimately what someone else is willing to pay for it. There are many other tools to help you estimate your car’s value- and now, many of them will offer to write you a check.

An Overview of the Process:

  1. Consult Pricing Guides
    Enter as much information about your car, its mileage, and condition level as you can into one or more vehicle-pricing estimators.
  2. Pick the Car Value You Need
    Are you trading in or selling to a private party? Decide which price you need so you’ll know which amount to look for.
  3. Look for Comparable Vehicles
    Take note of the area in which these vehicles are being sold, the asking price, and the number of similar cars for sale locally.
  4. Adjust Your Car’s Value for Depreciation
    Compare the pricing guides with real-world data from the online classifieds and offers from online purchasers such as Carvana.
  5. Consider Other Factors
    There are several factors that might influence the price of your car, such as the time of year, the local popularity of the vehicle, and any modifications you’ve made to the car.

Information You’ll Need to Estimate Your Car’s Value

  • Year, Make, and Model
  • Color and Optional Equipment
  • Vehicle Condition
  • Mileage
  • Your Car’s VIN or License Plate Number
  • The State It’s Registered In

How Quickly Do You Have to Act?

Experts at notice that vehicles are moving off dealer lots within a week, a much quicker turnaround time than the previous 30-60 days before they sold. According to CBS News, the cost of a used car is currently over 40% higher than it was about a year ago. Conversely, new cars are around 12% more expensive than this time last year. Though supply shortages are concerning, continued high car prices will give consumers an opportunity to sell their used cars and cash in on record-high prices. Take advantage of this once-in-a-lifetime trend and sell your vehicle at a decent profit.

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