Auto Trade Helper

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.

An experienced car salesman once told a youngster just starting out in the business that he could “steal” virtually anyone’s trade-in. What did he mean by that? Look closely at the simple process of “trade difference,” and you’ll see. Since the dollar value of the trade difference is the product of new car price, minus trade-in value being offered for your old car, there are hundreds of ways for a dealer to reach the same value of trade difference, because the new car’s price and the used car’s value are mathematical variables.

(Find out the value of your trade-in now by using this site, or another like it.)

Competing dealerships trying to sell you essentially the same car – let’s say, the Chevrolet dealer in your town and two more dealerships 30 miles away in either direction – might reach identical trade difference values in very different ways. Perhaps your hometown dealership is offering you a $24,000 new vehicle at full sticker price, minus a $4,000 trade-in value, for a “trade difference” of $20,000. One of the other dealers is discounting their vehicle to $22,000, but only offering you $2,000 on your trade, for the same net “trade difference” of $20,000. And the third has discounted the new car considerably, all the way to $20,000, meaning they really are investing $0 in acquiring your preowned vehicle for resale on their used car lot.

Which is the best deal? … None of them is, and the third dealer, as the grizzled old salesman suggested, is “stealing” your trade.

There’s little reason you shouldn’t be able to get both the lowest cash price for the new car and a higher trade-in value on your old one But you have to stop talking to the dealer about “trade difference,” to clear up the negotiations.

A smart buyer deals with the two transactions separately. He negotiates a bottom-line price on the new car, regardless of whether his used car will be traded-in at all. If one dealership can discount that new car to $20,000, the others can come close to that price, as well, for a vehicle of the same model and features.

Either before or after discussing the new car price, the buyer works with a used car manager at the dealership to establish a cash value for the trade-in, bargaining for every dollar the customer can get.

It helps to know what your used car is worth before you ever walk onto the dealership floor. Use online resources such as this site, or a similar one, to get an online quote for the value of your used car. Then go to the dealership prepared to get at least that much for your trade-in, and ready to negotiate the price of the new car separately.

If you’re aggressive and successful in these negotiations, you might drive away with $24,000 new car for just $16,000 – the “trade difference” that remains after haggling down to the fully discounted price of the new car ($20,000 rock-bottom) and getting full market value for your trade ($4,000).

Your trusty old car has been a reliable member of the family for many years. But now you need a new one.

Is that old car too old to trade? (Use a site like this one, or like this one, to find out what your car might be worth.)

Most new car dealerships these days have very strict guidelines for the types of used cars they want to offer on the preowned section of their lot. Cars made by manufacturers with good reliability records, and that hold high resale value, are tops on the dealership’s trade-in list. A well-maintained car with low miles is worth trading for, if you’re the dealer. And a desirable body style – like a convertible in a warm-weather area, or a four-wheel drive in a state where it snows a lot – can make the grade.

But the age of a car can be a serious drawback toward trading it in, or at least in getting the most value for the car. Even if your vehicle has low miles for a car its age, and even if you’ve maintained it meticulously, many new car dealers won’t actually try to resell your car on their own lot if its more than six or seven years old. (There are some exceptions, particularly for high-end luxury models like Mercedes and BMW.) Many times, an older car – even a nice, older car – will be quickly “wholesaled” to one of the smaller used car lots in town, or taken to an auction.

That means you’re unlikely to receive in trade anywhere near the kind of price that your nice, old car is really worth on the open market. If that’s the case, then perhaps your car is “too old to trade,” and you’re better off trying to sell it yourself – which shouldn’t be a problem if that car is as nice as you think. In fact, you might be able to take that vehicle straight to several of the local used car dealers on your own, and ask them to make you a cash offer. At these lots, even a car with a lot of years on it makes a good impression on their typical buyer, if that car is shiny, well-maintained and has low miles. It’s a car that dealership can sell.

If you’re still considering whether your car is worth trading, you can find out online. Just click here or here to get a quote.