Kelley Blue Book Value
The Kelley Blue Book Value is widely used to value a used car. They offer three different values—trade-in, private party, and retail value. The Kelley Blue Book retail value tacks on fees that cater to the dealership, which means that buying a car for the Kelley Blue Book retail value is not a good deal in the least. The KBB site even indicates this, stating that the retail value is representative of dealer's asking prices and should be the starting point for negotiation between a consumer and a dealership.
It is also an interesting fact that the Kelley Blue Book trade-in value is LESS than the wholesale price for a car. If the dealership were to offer you trade-in value for your car and turn around and sell the car at a wholesale auction, they still receive a profit. The difference between the Kelley Blue Book Value for trade-in and retail is usually several thousand dollars, which means they make a nice profit if they receive a car for trade-in value and sell it for retail value. Car dealerships receive their cars mostly from trade-ins and auctions where they buy cars for wholesale price.
The Kelley Blue Book private party value is between the trade-in and retail value. This is a more reasonable price and still allows the dealership to make a profit on the deal.
There are other vehicle pricing guides used by dealerships, such as the Black Book and the NADA Orange Book. We also compare all three books in our used car haggling page.
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