Understand Kelley Blue Book Pricing

Back in the early 1900's, a car salesman in California, Les Kelley, started making a list of what the local car prices were in an attempt to get an understanding of the real value of each automobile that he was selling. From this small start, the Kelley Blue Book was created. And soon, banks, credit unions and dealerships started looking to Kelley Blue Book as the main way to find the current market value of pre-owned vehicles.

What began as one person's basic listing has transformed into a widely accepted source for the value of all vehicles. Kelley Blue Book has become one of the primary ways for people buying and selling, both dealers and consumers, and professionals and novices to all have a common source of information in the negotiation process.

When these people need a source of unbiased information they turn to Kelley Blue Book for:

* New Car Pricing

* Pre-Owned Vehicle Vaules

* Trade In Values

Establishing New Car Pricing Using Kelley Blue Book

Too many consumers have mistakenly thought that there is no room for negotiation on the price of a brand new vehicle. A common mistake is to walk into a new car dealership, without doing any previous research, and accept the MSRP on the car. This is an error that can cost the consumer thousands of dollars. For example, all new cars have to have the Manufacturer's Suggested Retail Price (MSRP) displayed. This official price can trap you with a false sense of security, having you ignore other issues that could have an impact on the car's price.

The Kelley Blue Book guide offers advice beyond the MSRP, showing a few key areas that should be part of the negotiation process:

*MSRP: - This is the price that the manufacturer sets for the vehicle. This price is just a guide. In fact, that price is often artificially inflated, so you should pay less than this and never pay any more.

*Invoice Pricing: - Ever think to yourself, "What's the dealership's real cost?" The invoice price for the dealership can shine some light on the car's true cost. Understanding this price should be considered a starting point for the negotiation process. Dealers need to turn some profit so you should expect to pay more than this.

*New Car Blue Book: - This is the overall average price that the vehicle has been sold for country wide. This number can vary depending on the location you are buying the vehicle from. For example, a vehicle for sale in Florida is going to have a different average selling price than a car in Idaho.

*Additional Equipment Pricing: - Common sense dictates that there has to be a price difference between cars with no options and a vehicle with tons of extras and options. Kelley Blue Book values takes all these items into account when establishing the true value of a car.

Kelly Blue Book Pricing and Used Car Values:

Just like the price of a pre-owned vehicle is different than the price of a new vehicle, a car bought from the dealership will have a different price point than a car bought from a private party. The great news is that the Kelley Blue Book values take all these things into consideration:

*Used Car Values: The retail cost of a vehicle is used as a starting point for negotiations between the dealership and the consumer. This cost takes into account things like marketing, commissions and dealer overhead. Kelley Blue Book also takes into account money that the dealer has to spend on reconditioning the vehicle and maintenance on items like brakes, fluids and tires.

*Private Party Values: Private party values are the suggested values of what you can expect to spend for a vehicle bought from a private party. The values are lower than the prices through a dealership because it takes into account the higher risk of buying from a private party and the fact that the car is sold "As Is".

*Trade In Values: This value reflects what you can assume you will get for your vehicle if you trade it in at a dealership. Because the dealership has additional expenses such as overhead, safety certifications, repairs and recon, advertising and salaries, this value is less than what you could typically get selling it private party.

The Difference in Retail Value and Selling Price

Understand that Kelley Blue Book values are only a guide. Dealerships can use it as a negotiation tactic, explaining that their cars are priced below the Kelley Blue Book listed value. The problem is that these numbers can be deceiving. Most pre-owned vehicles have at least some wear, but many dealerships do not take this into consideration when getting their Kelley Blue Book pricing. This can lead to an inflated value.

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