Trade-in 101: How Do Price Quotations Work?

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Trade-in 101: How Do Price Quotations Work?

The time has come to change or upgrade your car for a sweet new ride. Instead of going
through the hassle of selling your old car yourself, you decide to trade it in at a dealer. Excited,
you visit the dealer and eagerly await their valuation of your old car — that’s when it hits you.
The amount quoted does not meet your expectations. How can this be? Did your car truly
depreciate that much? Is your dealer lowballing you?


In this article, we demystify price quotations for car trade-ins so you can have a better idea how
your car is priced, and visit a dealer with realistic expectations.

 

How Your Car Depreciates

Savvy buyers know that a car starts depreciating the moment it leaves the showroom. There are
a number of factors that affect your car’s value and its depreciation rate, but it is typically
calculated based on this formula:


Annual Depreciation = (Total Cost of Vehicle - Sale Value of Vehicle) / Number of Years
So if you bought a car for $150,000 and sold it 5 years later for $50,000 — its annual
depreciation would be $20,000.

 

How to Calculate the “Paper Value” of Your Car

The “Paper Value'' of your car is the amount you would get if you deregistered your vehicle
instead of selling it. Because it is fixed, many dealers in the used car market use this figure as a
baseline to gauge how much the car is worth before any other details are considered.
The paper value of your car is the combination of the Preferential Additional Registration Fee
(PARF) and Certificate of Entitlement (COE) rebate you would receive if you deregister your
vehicle.


The rates for the PARF rebate are as follows.
 

Vehicle age at deregistration

PARF rebate

Not more than 5 years

75% of Additional
Registration Fee Paid

Above 5 but
not more than 6 years

70% of Additional
Registration Fee Paid

Above 6 but
not more than 7 years

65% of Additional
Registration Fee Paid

Above 7 but
not more than 8 years

60% of Additional
Registration Fee Paid

Above 8 but
not more than 9 years

55% of Additional
Registration Fee Paid

Above 9 but
not more than 10 years

50% of Additional
Registration Fee Paid

More than 10 years

NIL


Your COE rebate is prorated based on the amount paid and number of years remaining on your
current COE. For example, if your COE was $50,000 and you choose to deregister your car
within 5 years, the rebate you would receive is $25,000.

 

What Goes Into a Dealer’s Price Quotation?

Now at this point, you must be wondering, how exactly is the sale value of my vehicle
calculated? Dealers take a number of things into consideration when deciding the valuation of a
car.


They include but are not limited to: brand, model, registration date as well as mileage, previous
accidents and whether the car has any faulty parts. Typically, dealers will determine the
valuation of your car by looking at data on similar models from their network of car dealers,
buyers and bidders.


Unlike regular consumer depreciation calculations, dealers will also take into account the car’s
paper value when performing their calculations. Dealers use the following calculation for
depreciation:

(Sale Value - Paper Value) / No. of COE Years Remaining

If a customer were to sell a car with 5 years of COE left and a paper value of $25,000 to a
dealer at $100,000 the depreciation would be:

($100,000 - $25,000) / 5 = $15,000 a year

 

Why Choose Trade-ins?

The biggest advantage of trading-in your car is how convenient it is to sell and buy a car from
the same place. From handling viewers to ownership transfers, loans and paperwork —
everything is handled by the dealership. The dealer can immediately offset the cost of your new
car using the trade-in, and there is no delay or wait between selling your old car and buying a
new one.


Sure, you might be able to get a bit more for your car if you sold it yourself, but you would also
have to spend more of your own time and effort brokering a deal with the buyer.
At CarVault, we respect our customers’ time and trust. That’s why we focus on value, clarity and
trust in all our dealings. We cap earnings for all our car trade-ins at $3,000 per trade-in (before
$100k) and 3% of the transaction price (after $100k). No hidden fees. No surprise charges. So
you know exactly what you’re getting.


Interested in trading-in your old car? Drop us a call or WhatsApp us at 8883 2909 to
speak with our experts or book a no-obligations appointment with us today!

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