Used Car Appraisal vs. Inspection: What’s the Difference?

Car Inspections vs. Car Appraisals: Why They’re Different and Why It Matters

Knowing a vehicle inside and out can help consumers and dealerships alike make informed decisions about buying and selling. It can also help prevent smaller mechanical issues from becoming more complex and expensive to fix. The two main tools for learning about a vehicle are vehicle inspections and vehicle appraisals. Combined, they provide insight into a vehicle’s condition and value. While both tools provide benefits, they serve different purposes. This guide dives into the key distinctions between inspections and appraisals.

What Is a Car Inspection?

Inspections are meant to ensure a vehicle is safe to be on the road and follows regulations, such as emissions standards. A vehicle inspection is performed by a trained mechanic who will thoroughly check vital systems and components, including the turn signals, headlights, braking system, and suspension. The inspection checklist can vary by state¹.

Car inspections are typically required before registering a vehicle to make sure it meets specific regulations. They may also be required while renewing a vehicle insurance policy to verify the car’s integrity.

Mandatory inspections are not the only type drivers need. Anyone buying a pre-owned vehicle is advised to have the car inspected before purchasing to ensure there are no unknown mechanical issues that may affect its value. This information also helps inform the buyer of additional costs they may need to plan for, given the car’s age and condition.

Some drivers may also want an inspection before a long drive that will take them very far from home, as a regular maintenance check, or after a collision². In these situations, the goal is to make sure the car is in the best condition possible and identify what repairs it might need in order to be safe to drive.

What Is a Car Appraisal?

The goal of a car appraisal is to determine the vehicle’s monetary value based on several factors, such as market averages and vehicle condition². The appraisal process is necessary to price a vehicle at a fair market value. It ensures the seller is striking an appropriate balance between value to the customer and the profits needed to keep the business afloat.

Appraising a vehicle begins with determining the average market value based on its make, model, and year. Use online tools to aggregate average sale prices and establish a spectrum of low to high prices the vehicle currently goes for to identify a reasonable range.

Once you have a target price range in mind, evaluate the vehicle’s options and condition to see where it fits along that spectrum. The number of miles on the odometer will be a factor in the car’s value—the higher the mileage, the higher the likelihood of wear and tear. The condition of the car’s body and interior will also be important. Dents and scratches decrease value, as do internal visual damage—such as torn seats and cracked plastic—and non-functioning integrated electronics³.

Some issues may need to be fixed before reselling the vehicle, so that investment needs to be considered in the overall appraisal.

The vehicle’s history can also affect its value. Records of all regular maintenance completed show that a car has been taken care of and is more likely to last. Being able to pass records on to a buyer helps increase the car’s value and can make it easier to sell. Likewise, it’s important to check the vehicle’s VIN to see if there are any prior accidents recorded. Even after repairs, an accident history can heavily impact the vehicle’s value due to potential concerns about underlying damage and non-original parts³.

A car’s price point can change drastically depending on the trim level and any upgrades. Optional features, such as specialized tires, leather upholstery, chrome accents, and upgraded audio systems, can enhance the vehicle’s value. Functional features, like special off-road driving settings, engine upgrades, and navigation systems, can also add to a vehicle’s value⁴.

Knowing which models and trims are in demand can help with appraisals as well. Sometimes, a particular style and model can be in such high demand that it becomes more valuable, especially if supply is scarce.

Once a dealer completes their appraisal, they can decide on a fair purchase price that factors in the cost of repairs as well as the desired profit margin.

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