Understanding the Relationship Between IDV and Resale Value: A Guide for Car Sellers
When selling a car, understanding the relationship between Insured Declared Value (IDV) and resale value is crucial. IDV is the maximum sum an insurer will pay in case of theft or total loss of the vehicle, based on its current market value. Resale value, on the other hand, is the price at which a used car can be sold on the second-hand market. This article explores the connection between these two concepts and provides actionable advice on setting a fair and attractive selling price.
The Relation Between IDV and Resale Value
Market Value Indicator: IDV serves as a key indicator of a car's current market value. A higher IDV generally correlates with a higher resale value, while a lower IDV suggests a lower resale value. This is because IDV takes into account the car's age, make, model, and condition, which are all factors that influence resale.
Depreciation Factor: As cars age, their IDV decreases due to depreciation. This decrease in IDV can impact the resale price, as potential buyers often refer to the IDV to assess the vehicle's worth. Understanding the depreciation curve of your car can help you adjust your selling price accordingly.
Should You Keep the Selling Price Higher than IDV?
Selling Price Considerations: It is generally not advisable to set the selling price higher than the IDV if you want a smooth sale. Buyers may be influenced by the IDV and a price significantly higher than the IDV can deter potential buyers. However, there are exceptions to this rule. If the market demand for your specific car model is high, you might be able to sell it for more than the IDV.
Market Dynamics: The current market conditions and demand for a specific car model play a significant role. For instance, during a chip shortage, certain vehicles like the Thar and Creta, which had long waiting periods, were sold at higher than the current on-road price. This was due to price unreliability, the cut in car features, and the collapsed supply chain management caused by the COVID-19 pandemic.
Negotiation and Expectations: You can start with a price slightly above the IDV to allow room for negotiation. However, setting expectations based on the IDV is usually a good strategy. This approach ensures that you are at an advantageous position to negotiate and makes your offer more attractive to potential buyers.
Conclusion
While there can be instances where a car sells for more than its IDV, it is typically best to align your selling price with the IDV. Doing so ensures a fair and attractive offer to buyers. Using online vehicle calculators can also provide valuable insights into the market value of your car, helping you set a competitive and realistic selling price.
Key Points to Remember:
IDV is a critical indicator of a car's current market value. IDV decreases over time due to depreciation. Selling price should generally be aligned with the IDV for a smoother sale. Market demand and current market conditions influence the resale value. Using online calculators can provide valuable insights.By understanding the relationship between IDV and resale value, you can make informed decisions and achieve a fair price for your used car.