Auto Trade Helper

You’ve driven your old car down to the dealership in hopes of trading up to a new one.

Hopefully you’ve prepared the car well – washing and detailing it, and fixing minor problems that could turn off an appraiser and cause him to lower the car’s value. And hopefully you’ve prepared yourself for the experience by determining your used car’s worth in its current condition, so you know what trade-in value is fair to expect.

Now it’s time to negotiate the most for your trade.

Most dealerships are going to prefer working your trade-in and new car purchase as one deal, with a resulting value known as the “trade difference.” Step 1 to getting the most for your trade-in is to separate these transactions, because they are not one and the same.

Reaching a fair trade-in value for your used car must be kept independent of the price of the new car, so that you can accurately determine what you’re really being offered for your trade-in. You might already have negotiated the price of the new car, or that negotiation might follow the trade-in talks, but you don’t want to deal with these two values at the same time. It just confuses matters for you, to the advantage of the dealer.

The trade-in negotiation will begin with an evaluation of your car by the used vehicle sales manager at the dealership. He will check for functionality of lights, horn and signals. He’ll probably take the car for a very short drive to see if it has readily apparent power, ride or handling problems. And he’ll look at the car’s paint and body lines to see if there are telltale signs of a prior accident. Then, he will refer to a publication – usually the NADA guide, Kelly Blue Book or the “Black Book” to nail down his initial offer.

Your job is to know all of these values prior to driving into the dealership. If you have pre-assessed your own car – its mileage, features, condition, etc. – and compared that to these sources before you visit the new car store, then you should have a very good idea of what the sales manager is about to offer you. Have those figures (from each book and from online resources) written down and in your pocket or purse for quick reference.

If the sales manager makes you an offer that is right in line with these figures, congratulations, maybe this negotiation won’t be that difficult after all. You probably can’t expect to get more than Blue Book trade-in value for your car, so if the dealership has made an offer equal or very close to that, and if you’re comfortable with the price of the new car, don’t feel like you have to fight the dealer for more money on your trade-in.

However, if they “lowball” the trade, stand your ground. You’ve done your research. You know what your old car is worth, and if you can’t get that price here, you can probably get it somewhere else.

There’s no need to be rude, but tell the sales manager that you’ve studied the value of your trade-in, and you won’t be trading this car today if you don’t get that fair market value.

It usually doesn’t feel like it, because buyers are much more uncomfortable with the process than sellers. But in this game, you hold all the good cards – you have both the money being spent for the new car (either in cash or probably via loan) and you have the used car that the dealer might be able to resell at an additional profit. If you are uncomfortable with any aspect of the transaction, then it’s no sale. Tell the used car manager in no uncertain terms that you’re willing to shop around at different dealerships until you get the deal you want; not only a good price for the new car , but fair market value for your trade.

The sales manager might give you numerous reasons why the car isn’t worth what you want for it. From his perspective – maybe he has too many SUVs already, or in his neighborhood Saabs are hard to sell – he might even be right. Be willing to listen. But that doesn’t mean you need to let him have the car for what he wants to pay for it, especially if you’ve used these sites to do your homework and know the full value.

Be prepared to take that used car home and drive it a few more weeks or months, if need be. Or to buy the new car without a trade-in and sell the used one yourself – it’s usually worth more in a private sale than it is in trade, anyway, although there’s some hassle involved in selling.

You should never feel like the dealer has you “over a barrel.” You can always drive away in the car you drove in with, and with your new car-buying money safely tucked in your pocket.

And that’s negotiating power.

When buying a new car, a lot of factors go into determining whether you might be better off trading in your old car at the same time, or selling the used car yourself and applying the cash to your new vehicle purchase.One costly component of the transaction that many car-shoppers fail to consider when making this decision is the impact of sales tax.

In many U.S. states, the sales tax a new car buyer pays on his vehicle purchase is not calculated on the overall sticker price of the car, nor even on the final cash price paid for that new vehicle. Rather, sales tax is paid on the price that remains after the buyer’s trade-in has been figured into the deal – a value known as “trade difference.”

(Find out right now what your used car is worth as a trade-in!)

In other words, if you are buying a $20,000 new car and getting $5,000 for your trade, you would pay sales tax only on $15,000, and not on the $20,000 that the new car actually costs.

For a hypothetical example, a car-shopper buying that $20,000 new vehicle in Liberty, Clay County, Mo., would pay $1,470 in state and local sales taxes on the total purchase price. But the sales tax would be only $1,102.50 after receiving $5,000 in credit for his trade-in.

The difference here is only a few hundred dollars, but it becomes much more as the price of your chosen new car escalates, or the value of the car you’re trading increases, lowering your trade difference. For instance, trading-in a $10,000 used car on a $40,000 new truck at a Liberty, Mo., dealership would result in taxes of $2,205 rather than $2,940 – a savings of $735. And trading-in a $20,000 used Mercedes on an $80,000 new one in the city of St. Louis, on the other side of Missouri, results in state and local taxes of $4,944.60 instead of $6,592.80, saving the consumer $1,648.20.

This is valuable information to know when deciding whether to trade in that old car or sell it yourself, because if you can’t sell your old car privately for its trade-in value plus the amount that your trade can save you in taxes, then you’re losing money.
Find out right now what your trade-in is worth, and start deciding whether it’s smarter to trade your old car than to sell it yourself.

It would surprise most car-buyers to know, but your used car could be worth more to the dealership than the new car you’re buying from them. That’s because the “margin” dealerships maintain on selling used cars is often higher than the margin for selling new ones.

While the worth of used cars of the same year, make and model varies drastically depending on their miles and maintenance, all new vehicles are created equal. A white F-150 pickup truck with four-wheel drive, automatic transmission and a CD player can be purchased for almost exactly the same price, no matter which new Ford dealer you visit. Though there are some variables (such as sales volume, size of the dealership’s payroll, building maintenance costs, etc.) each dealer paid the manufacturer the same amount for that F-150. So all dealers have about the same amount of “wiggle room” in the price of such a truck, and good negotiating will result in a very similar purchase price on a new F-150, no matter what dealer you’ve selected.

In fact, some new vehicle dealers now slash prices so drastically and so routinely that new cars often sell for very little more than what the dealership paid the manufacturer for them – a slim “margin.” (The dealership then tries to make its profit on new cars by selling expensive add-ons, like accessories or undercoating, and through incentives from the manufacturer for sales volume, and from lenders for “originating” the buyer’s car loan.)

Meanwhile, on the used car side of the lot, business is handled very differently. The dealership knows precisely what it gave in trade for all the cars in its pre-owned inventory, and that price wasn’t a flat rate charged by a manufacturer, it was variable, and depended on the negotiating skill of the used car manager. If he “bought the car right” at trade-in time, then he has a lot of buffer between the price the dealership gave the former owner for it, and the advertised price of that car on the lot. … The dealer has lots of “margin” for profit in that car.

(Find out the value of your used car now through this service or at this site!)

So that’s why your used car is worth more to the dealer than the new car they’re selling; while they might make only $100 or $200 over invoice on the new car, they might make $2,000 or $3,000 on a used car sale, provided they didn’t give too much for the trade-in.

How is this information useful to you? By understanding that your car has considerable value to the dealer, you can have more confidence in negotiating a good price for it.

Used car trade-in sites such as this one and this one can give you a quote on what your used car is worth. Using that information, or figures gleaned from books like the NADA guide or Kelly Blue Book, compare the likely trade-in value of your car vs. the average retail price dealers ask for that same car, once it’s been placed on their lot for resale. The difference is the profit that the dealer hopes to make when he resells your trade-in, and knowing that figure can help you in negotiating the most for your trade.

So you’ve decided to trade in your old car and get a new one; what are the most important points to consider? First, be realistic about the value of your car. Use Web sites or printed materials like the NADA guide or Kelly Blue Book to determine what your car is in trade. Many factors influence your old car’s value, including the mileage on its odometer, features such as air-conditioning and power windows, and even the car’s color. Knowing this information will help you understand what the dealership’s used car manager is likely to offer.

But there’s a second part to being realistic about the value of your old car; ignoring your sentimental (or hostile) feelings toward that vehicle.

You might have owned the car for a decade and it has never let you down. It’s almost a member of the family, albeit one that’s about to need expensive repairs, so you’ve decided to trade it in. None of those good times makes the car worth any more to a dealer.

On the other hand, you might have grown tired of that old car, or maybe you’ve had to fix that confounded clutch too many times. But don’t let your desire to dump that ride as fast as possible cause you to take less for it in trade than it might be worth. Find out the value with a site such as this to keep you from making a costly mistake out of frustration.

Next, be sure to prep the car before taking it in to trade. A good washing and detailing is the first step.

A dirty car will bring less in trade, not only because it makes a dull impression, but because the sales manager will wonder whether you’ve given the mechanics of the car the same lack of attention as you have its appearance.

You might want to fix minor issues with the car before taking it in for a trade-in appraisal, but think first about whether you’ll get your money back from the repair. Replacing a blown brake light bulb, for instance, is cheap and simple. You should get that brake light back in service to avoid it making a bad impression on the appraiser. But if your tires are about worn out, it might not be worth replacing them. The dealership is likely to put a new set on regardless (unless your car’s tires have a lot of life left) and they can do it cheaper than you can at retail prices.

Finally, be prepared to negotiate. The aspect of car-buying that most people fear or hate the most is the haggling process – you make an offer, the dealer makes a counter-offer, and so forth until you have a splitting headache and just want to go home. Well, when trading in a used vehicle, in effect you’re haggling with the dealer twice; once for the price of the new car, and once over the value of your trade-in.

Go in armed with the information you learned from the Internet or published sources, and with a firm idea of what both the new car and your old car are worth to you. You don’t have to be inflexible and uncooperative, but don’t be clay in the salesman’s hands, either. Get the kind of deal you want – you’ve prepared yourself enough to know what the prices should be – or else be prepared to “walk.” … Unless you live in a very small market, there are other dealers and similar cars just down the street or across town.

You’ve decided it’s time for a new car. But what should you do with the old one? Trading it in at the new car dealership is the first thought that comes to most peoples’ minds. But is it the best answer for you? It’s possible you might come out ahead by selling the car yourself.

The decision usually comes down to what your car is worth as a trade-in, and whether you are willing to pay the price and do the work necessary to sell the car on your own.

A great place to start in making the decision to trade or to sell it yourself is to research the trade-in value of the car you now own. Use resources like this Web site or this site to get a quick quote on what a used car like yours is worth.

Publications like Kelly Blue Book and the NADA guide will also give you an idea of what a vehicle of your car’s year, make and model might bring as a trade. These books also tell you what a car like yours is worth in a sale between yourself and another private motorist – and usually that price is higher. Since the dealership needs to trade for your car at a price that leaves room for markup and resale, cutting out the dealer as the middle-man lets you make that additional money for yourself, instead.

However, some cost and hassle will go into selling the car yourself. You’ll probably buy an ad online or in the local paper to get your car’s information and your phone number out to the buying public. And you’ll need to be willing to meet with anywhere from one or a few, to dozens, of prospective buyers, until you find the one who wants your car enough to pay the price you desire.

Sometimes, dealers will offer you enough for your trade to make it well worth giving up all that hassle of selling it by yourself. If your car is a fairly recent model, by a manufacturer with a strong reputation for reliable cars and high resale value, and you’ve kept your car well maintained, with low to average miles, you have a good candidate for trade-in. Ask for a quote from a site like this or one like this to get started!

You might be surprised to learn that, when trading in your used vehicle, timing could be one of the biggest keys to maximizing your trade’s value. Most people would never consider the time of the month or year in determining whether now is a good time to trade for a new car. They’ve seen a flashy new car commercial on the television, or saw a dazzling new vehicle pass them on the highway, and they’ve headed right down to the dealership to see what they’d have to pay to own one. Or perhaps they’ve suffered long enough with an old vehicle that no longer suits their needs (perhaps it is too small for a growing family) or that is facing an expensive repair – a car they just want to be rid of.

But, believe it or not, your car might be worth more tomorrow – or next week, or next month – than it is worth today.

Consider the vehicle you’re about to trade in, and ask yourself whether – as a used car – it might be a seasonal impulse purchase for the dealer’s prospective buyer. That can make your trade-in worth more money now (or later) than it might be at other times of the year.

For example, if you are now driving a 2003 Mazda Miata, spring and summer could be your best time to trade for something else. That spiffy little convertible is going to look great sitting on the front row of the dealership’s used car lineup as potential buyers drive past the lot on a sparkling, 80-degree weekend. It’ll practically sell itself.

On the other hand, unless you live in a part of the country where it is warm virtually year-round, that Miata won’t be very appealing in November or December. The dealer is very aware that the car could sit in his inventory until the temperatures warm up again – making top-down motoring a joy – and it’s possible he’ll offer less for your Miata if you try to trade it on Thanksgiving weekend than if you bring it by next Memorial Day weekend, even though the car will have more miles on it by then.

Conversely, a four-wheel-drive truck or SUV could have its highest appeal to buyers when the weather gets the worst. An ideal time to trade in that Explorer 4×4 might be right after the winter’s first big snowfall, when motorists all over town were getting stuck in the drifts with their two-wheel-drive cars.

So seasonal timing makes sense when trading in your used vehicle.But time of the month or even time of the week or day might make a difference in your favor.

Like most businesses, car dealerships measure their periodic success by their monthly sales goals. Trading in your car at the end of the month might help you get a better offer, if the dealership is a little behind on its sales quota or just wants to finish the month on a strong note. The used car manager might give you more for your car to make sure their new car gets sold today – on the last day of the month – rather than next weekend, when a new month’s sales goals (and potential bonuses for managers) are on the ticker.

Picking the right day of the week also can help on your trade-in value. A dealership’s busiest day is usually Saturday. That’s when the most people have the time to car-shop, and when a majority of the deals get done at many dealerships. Trading-in your car on a Saturday means the used car manager is probably pressed for time and might give your vehicle a less-thorough examination than he would on a day when you’re the only customer on the lot. If your car is of marginal trade-in value, a cursory inspection by the manager could be to your advantage. If your trade-in is an exceptional vehicle, you might rather trade it on a day when you and the used car manager have plenty of time to walk around it, inspect it, and negotiate the highest value he’s willing to pay.

Finally, the time of day can actually make a difference in what kind of deal you get on a new car, or when trading-in your used vehicle.

Human nature dictates that, early in the morning or at the height of the day, most sales managers might have more energy to wrestle with you over the value of your trade-in, and be more inclined to haggle for a lengthy period before settling on a price. Conversely, many a good deal has been nailed-down at the tail end of a business day. If you make it apparent to the salesman and the sales manager that you’re serious about trading for a new car today – even though the hour is getting late – they’ll probably cut to the chase much quicker than they would earlier in the day, so the deal can be done and you can all get home for dinner.

When determining and negotiating the highest possible value for your trade-in, you should use every tactic possible to sway the deal to your advantage. And choosing the right time of year, time of the month or even time of the day to bring your trade-in to the dealership can be one way of achieving maximum trade value.