The difference between credit shortfall, market value and retail value
This post was published on 24 Nov, 2021

Retail value, market value and credit shortfall – what do these terms mean?

Most of the cars on our roads are financed through banks or another financial services providers. In the unfortunate event that your new car written off in an accident or stolen, there may be a difference between its insured value and the amount owing to the finance company. This difference is known as a ‘credit shortfall’ and you might be liable to pay this amount to the bank.

Retail value, market value, trade value…feeling a little lost and confused? You’re not alone – a lot of people have little to no understanding to these terms and how they are defined within the car insurance industry. Not understanding the difference between retail, market and trade value can often have a negative effect on both your premiums and any car insurance payouts you may claim for.

That’s why at iWYZE, we want to make your life easier by clarifying the various car value options available, so as to help you make an informed decision about your car insurance, and ultimately, your financial security.

What is the retail value of my car?

Simply put, the retail value of your car is the price it would ‘retail’ for, were you to buy it from a car dealer. This value is the closest in price to your car’s replacement value – the amount it would cost to replace your car with a similar model, should it ever be written off. As the retail value of a car is market value obviously the highest amount it can sell for, insuring your car at this value will result in higher car insurance premiums – but will also ensure you the highest possible payout should your car be written off, stolen or hijacked.

What is the trade value of my car?

Let’s say you wanted to sell your car, and to a dealer, rather than privately. The trade value, or book value as it is otherwise known, is the average amount that the car dealer will pay you for your vehicle. This is an amount less than the retail value of your car, and so you will pay a lower car insurance premium as a result – but bear in mind that you will then be insured for a lower amount too, and will not receive the full replacement value of your car in the event of it being written off or stolen.

What is the market value of my car?

We hope you now have a better understanding, when it comes to the various car value options. The market value is often the option that people find most confusing. By now you should understand what is meant by retail value and trade value. Market value is the average of these two amounts – a variable value based on factors such as the age of your car, its mileage, its condition, and its supply and demand in the marketplace.

If you were to sell your car privately, you would be selling it for its market value – but because this depends on a number of variables, it can be difficult to calculate exactly (although there are handbooks and websites that can be helpful in assessing this). Insuring your car for its market value will ensure you a lower premium than if you were to cover it for its retail or trade value – however it is important to keep in mind that the payout you receive in the event of your car being written off or stolen will likely not allow you to purchase a vehicle of similar value or condition.

Calculate the value of your car with iWYZE

Need help in determining the current value of your car? Simply make use of a vehicle value tool to help you calculate the amount for which your vehicle should be insured. Then decide on the type of value you will be insuring your car for – retail, market, or trade.

While some insurers only offer car insurance options based on retail value and trade value, at iWYZE we give you the option of insuring your car for its market value as well, allowing you the ultimate in flexibility and affordability. It’s worth remembering, however, that between retail, trade and market value, the best option to choose is always the one that pays out the full replacement value of your vehicle, giving you the peace of mind and financial support you need in challenging circumstances.

Contact us for a free car insurance quote today

Ready to make a decision and insure your vehicle for either its retail, trade or market value? Then contact us today for a free car insurance quote by requesting a quick quote online, and take the first step to securing your future along life’s highways.


Terms and conditions apply. Please note that the content displayed on this site is for information purposes only and does not replace our policies’ terms and conditions. The policy wording supersedes any marketing material. Any claim will be considered against the terms and conditions that apply at the time of claim and as set out in out customers’ policy documentation.