KBB vs NADA – Which One Is More Accurate?

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What’s my car worth? The first question that comes to mind when you want to sell your old car. There are at least a couple of approaches to this question. It is worth as much as someone wants to pay, you can think. But it is more of an Arabic bazaar method to set a price. Or to be precise, not to set it but haggle for hours trying to get as much as you can.

Another method is to look at an average price on the market and work with that. Well, this is also not super accurate. Every used car is unique and many factors influence its performance and future maintenance costs. The price should reflect that.

The easiest way to find a considerate price is to check KBB (Kelley Blue Book) or NADA (National Automobile Dealers Association). Both are trusted resources and available for free. You fill in some data about your car and they will calculate the value. It’s a good tool when selling or buying the car. And it’s a good argument when bargaining. Car value is based on market and professional calculations. Not on sellers’ fantasy.

KBB and NADA work for more than eighty years. Both have the experience, proper tools, and a good reputation. But in many cases, they show a different price for the same car. When you sell, of course, you would love to refer the one with bigger numbers. Most probably, the buyer will counter you with the one showing the smaller price. To win this argument, you must learn why price differs and how KBB and NADA get to a different price. But first, let’s talk about similarities.

What KBB and NADA Have in Common?

  • Popular with consumers and dealers.
  • Calculate values for cars, trucks, SUVs, RVs.
  • Both are routinely updated.
  • Both are customer-oriented.
  • Both rely on information provided by a car owner.

Talking about information, consider getting a car history report for your car. To the buyer, it will guarantee that value was calculated based on the real condition of the car. A used car with a good history will always have a bigger price. And you will sell it faster and smoother. With a VIN you can get a report from providers like carVertical or CARFAX. 

Even though KBB and NADA have major similarities, there are significant differences in how they calculate the value. They use distinctive methodologies. Using the same information, they put different importance and weight for various parameters. Talking in broad terms, KBB puts a bigger emphasis on vehicle mileage, additional features, the general condition of the car and popularity of that model. While NADA relies on wholesale prices significantly. Wholesale price is a price paid by dealerships for similar cars.

OK, let’s analyze both providers to understand them better. During negotiations, it will help significantly.

Kelley Blue Book and How It Works

KBB was founded by Les Kelley in the year 1926. An up-and-coming car salesman from California began making an archive of car prices. First, it was intended only for personal use, to help him evaluating cars. What’s my car worth? It’s the question that was relevant even back then. When the database grew, Kelly saw a demand for such service as KBB is now. Dealers and consumers needed a fact-based method to calculate a value. KBB became the first choice for both.

KBB car value is calculated with the help of a few general parameters:  

  • General condition of the vehicle.
  • Popularity of that certain model.
  • Warranty. Is it still valid?
  • The condition of the local market.

KBB uses an algorithm that combines general parameters with information that comes from a specific vehicle. In such a way, the customer gets to know the value of their car. On the same KBB platform, they can compare the value of their car with the prices at different dealerships and private sellers. It’s quite handy that KBB works very well throughout the country. And you can compare prices in different states.

You can also learn a trade-in value of the car. KBB trade-in value is also calculated using the same parameters. 

NADA and How It Works

NADA (National Automobile Dealers Association) was formed in 1917. The first “Official Used Car Guide” was published by NADA in 1933. It provided used car values for its members and subscribers. With time, those books grew into a full service that it is now. From the start, NADA became popular with consumers and professionals at car dealerships.

NADA car value is calculated using different criteria than KBB:

  • Wholesale price (e.g. prices paid by dealerships).
  • Demand at the local market.
  • Retail market prices at the moment.

Usually, NADA calculates a higher value than KBB. One of the reasons is that NADA presumes that the vehicle is in relatively good condition. In such a way, KBB became more popular with buyers. While NADA is seen as more reflecting the seller’s objective.

Both, KBB and NADA are a valuable source of information. Those are two very educated opinions, but they still show a median value. Neither should become a sole source of information. Best to use them together and make your adjustments depending on the concrete problems and advantages of the certain car. What’s my car worth? Is a question that must be answered by you. All in all, KBB and NADA are invaluable tools preparing for haggling and getting the best deal.

Pricing Terms When Selling or Buying a Used Car

  • MSRP (Manufacturers Suggested Retail Price). It’s the price that car manufacturers suggest car dealers selling their vehicles at. Usually, manufacturers don’t suggest any prices for used cars.
  • Invoice Price. It the price paid by the dealer to the manufacturer. Sometimes it is called the dealer’s cost.
  • Transaction Price. It is the selling price of the new or used car. It includes all fees, but taxes are not included.
  • Wholesale Price. It is the price hat dealership paid for the used or pre-owned car. It’s a red line for the dealership. They can’t sell for less if they don’t want to lose money.
  • Trade-in Value. This is the price that the dealer offers for your used vehicle. Keep in mind that usually, it’s easier to get a better deal when selling to a private person. When dealers buy, they already think about reselling and their profit margin.

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