What Are NADA Guides Values?

March 16, 2021
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Whether you’re selling your car privately or trading it in to a dealership, you absolutely need to understand the value of your vehicle. The last thing that you want to do is get taken advantage of because you don’t understand your vehicle’s worth. That’s where NADA Guides values become important.

However, there are quite a few different car evaluation tools out there. These are known colloquially as “books,” since they began as physical books. With so many options, which bok value should you use?

Today, we’re going to take a look at NADA Guides, one of the most popular car value estimators out there. We’ll take a brief look at their history, discuss how they reach their values, and examine when you should use their evaluation tool.

What is the NADA Guide?

Short for the National Automobile Dealers Association, NADA has been around since 1917. Not long after their formation, they started releasing NADA Guides, which is an evaluator tool used to determine how much a used car is worth. 

Back in 1933, it was released as a periodical publication that has grown into a fully-featured website that helps consumers to understand as much as possible about a car’s value.

NADA Guides values are trusted by countless car dealers and consumers when it comes to understanding the worth of any given vehicle. They are widely considered to be an equivalent to the popular Kelley Blue Book. There is much debate about which one of the two is more accurate, but the truth is that they are both worth using.  

How Does NADA Reach Its Value?

Since NADA Guides was created out of a car dealers’ association, NADA Guides use real sales data from car dealerships to reach their values. NADA Guides use three primary criteria to determine the value of any given car:

  1. Local market demand
  2. Wholesale price
  3. Real-time retail market prices

NADA Guides put heavy emphasis on the car’s wholesale price, as opposed to focusing on mileage and conditions, as other value estimators do. The downside to this, however, is that NADA assumes that all vehicles are in great condition. This practice results in overinflated prices in situations in which the vehicle does have mechanical or cosmetic issues.

You should use NADA Guides values in conjunction with other value estimators to paint a picture of your car’s worth. Dealerships will use NADA Guides to establish a loan value for when they look for financing offers, then they’ll typically use the Black Book to reach their offer amount. This means that you should use everything at your disposal to counter their offer and ask for more. You deserve to get the most out of your trade-in. 

Are NADA Guide Values Accurate?

NADA Guide values are considered by many to be overinflated, due to the fact that they don’t factor in the condition of the vehicle. However, many dealerships and consumers still use these guides to get an idea about what their car is worth.

Dealerships typically use the Black Book and NADA Guides in addition to their own appraisal to determine the value of your trade-in. They want to make money off of your trade-in, so they’ll generally offer you a much lower value than what you’re expecting.

When Should I Use NADA Guides Values?

You should use NADA Guides whenever you are planning to trade in or sell your car. Don’t rely solely on Kelley Blue Book — use NADA Guides, as well. Both are free, so you might as well put them to work for you! The more information that you can bring to the dealership with you, the better your negotiation will be. There is no single source that dictates your value; you’ll need to use multiple sources to understand the worth of your vehicle.

NADA Guides are largely used by financing companies, too.

Ultimately, NADA Guides are a great resource for anyone that wants to gain an understanding of the value of their car. Just like with Kelley Blue Book, don’t expect a car salesman to suddenly accept your value from NADA Guides. You will need to secure several other quotes from sites like Carvana, Vroom, and Carmax, and leverage these offers during your negotiations. You should do everything that you can to get a great deal on your new car.

If you’re selling your car privately, NADA Guides and the Kelley Blue Book can work together to justify your asking price. You can use both in your negotiations with the other party to help you get the best price for your car.

Interested in learning how people come up with car values? You can learn more about other evaluation books here.

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