Technology and digitalization have significantly changed the way businesses operate nowadays. Consumers expect businesses to offer a website with detailed information about their products and services.  New car shoppers most often turn to portal sites for the new-car pricing, advice and information they need to buy a new ride. The problem is that most of these websites don’t provide the complete price transparency you need to make a $20,000 to $60,000 purchase. So how do you determine the Fair Market Value for a new car?

Determining the Fair Market Value (FMV) for a New Car

Let’s take a look at the online resources that can help you determine a car’s fair market value. The most commonly used pricing resource for new and used cars is KBB or Kelley Blue Book. The site examines invoice price, holdback, factory-to-dealer incentives, advertising fees and any number of hidden variable costs necessary to figure out the “real price” for a vehicle. Another resource is The National Automotive Dealers Association (NADA) Used Car Guide Book which provides detailed pricing for new and used vehicles. Their guides are used by consumers and dealers alike to determine the fair market trade value for your car or truck.

Car Shopping with Multiple Sources

It is important to remember that you should check multiple sources to determine the FMV of a new car. One strategy is to send email requests for price quotes to dealers to establish a range for the FMV of a new car. (Note: the price from the dealership furthest from you is most likely to be the lowest They know you won’t make the trip unless they offer you the lowest price possible.)  Dealerships’ reticent to share a total purchase price are making clear they do not competitively price their products.

Let them know you plan to compare the sale price and all available incentives. Gather these prices and compare to 3 party site generated prices to determine a FMV price range. Remember Econ 1, if there is a shortage of the car you want the price will be higher. An abundance and price declines.

Market values fluctuate depending on sales volume, inventory and planned production. This requires you recheck prices when you get close to buying. Any market will have some customers paying a bit more and some a bit less for the same vehicle. Being prepared to understand the FMV price and what drives it will save you money on your next purchase or lease.  Best of all, it will shorten the time it takes to negotiate your final deal.

They range from the practical (make sure you test drive the car) to the silly (make sure you like the car) to the urban legend (make sure you buy the car on the right day of the month). It isn't breaking news that there is a lot of noise out there cluttering up the decision making process when it comes to the consumer's car buying journey.  At some point it becomes too much information and gets in the way.

So how do you give solid advice when it comes to helping consumers cut through all that information?  I teamed up with Joe Webb of DealerKnows Consulting and James Raia The Weekly Driver to discuss what we think are some helpful hints to make the car buying process easier.

How do you advise friends, colleagues and potential customers?