How to Get the Most for Your Trade-in
Bringing a trade-in vehicle to the dealership is a familiar tradition and a reasonable method for lowering the overall purchase price of your replacement car, truck or van. If you have no payments remaining on your current vehicle, your trade-may significantly offset the new(er) car purchase price and will usually lower the sales tax.
To a typical dealer, the actual cash value of a trade is an opinion of what the vehicle could reasonably be sold for at auction, less any reconditioning costs. Only the better trade-ins are typically held on a dealer’s lot, usually for six weeks to three months, before they are sent to auction.
In addition to reconditioning costs, the dealer must also consider the cost of holding a car in inventory such as cleaning, taxes, lot security, and advertising. The price you are offered for your trade-in must also naturally include a reasonable profit margin. Also, most states have requirements for a dealer to warranty or even guarantee a used vehicle for a certain amount of time and or mileage if it is sold to the public.
Start With the Black Book
At CarQuotes.com, we like to say “Know before you go!” When we say that, we are usually referring to our new car no-hassle CarQuotes Vehicle Pricing Reports. The same concept, “know before you go,” applies to trade-in values. To get the most value for your trade-in, a little research is required. CarQuotes.com offers an estimate of trade-in value as one of our Research Tools.
CarQuotes.com’s Research Tools include access to the leading used car valuation guide, Auto Black Book Car Values, a service of the National Auto Research Division of Hearst Business Media Corporation.
What Black Book provides
Black Book values provide a guideline for pricing that is based upon actual auction sales in our area, the Midwest Region. There may be many cars similar to yours for sale through local auction sites. If so, the Black Book price may come very close to the most a dealer can offer you. If there are very few cars similar to yours sold at auction, the Black Book price may be similar to what the dealer can offer. The calculated Black Book estimated value is not guaranteed, but will provide an idea of the upper limit of the price your dealer may offer. Also note that the condition and mileage of your vehicle is a critical element in determining trade-in value. With the CarQuotes Black Book Valuation Report in hand, you’ll have done some basic research regarding the possible trade-in value of your Vehicle.
Next, check the Classifieds and the Internet
Look up your vehicle in the local newspaper’s classified section. Typically, Thursday through Sunday editions carry more vehicles offered for sale. Also, you may also have local specialty publications devoted to cars and other vehicles available for sale in your region. The prices you will see tend to represent the upper range of market prices. The price offered, of course, may not be the final sales price after negotiation with a buyer.
Using CarQuotes.com’s used car listings, look
up vehicles like yours with similar features and mileage. The prices you find will include the dealer’s mark-up, but also give you an upper range on the local market value of your trade-in.
Shop Your Car Around
We’ve talked about beginning your pricing research by using CarQuotes.com’s Research Tools, and determining the upper limits of trade-in value through the use of local publications. What about determining the lower-end of the value range? Take your car around to several dealers and tell them you want to sell your vehicle outright. The price you will be offered will likely be a bit lower than what you could actually get on a trade-in, but you will gain firm knowledge regarding the least you should accept for your car.
Ask YourselfOnce you’ve completed all your research, you now need to ask yourself several questions:
- Is there much of a difference between the Black Book and the prices found in the newspaper?
- To get more for your car, are you willing to try to sell the vehicle yourself?
- Is the additional money you might gain by selling the car yourself worth the wait and the trouble?
Trade-in Tax Advantage
One more factor that may make trading your car at the dealer the best option for you: In most states, you pay sales tax only on the difference between the new car price and the value of your trade-in. If your trade-in value is, for example, $10,000 and the sales tax is 7%, then you could save $700.
Condition—The Big Price Variable
When you take your car to the dealership for appraisal as a trade-in, the key variable in the price you will be offered is the perception that the dealer has of your car’s condition. Most dealers are reasonable and expect a car with a few years and miles not to have some minor flaws.
Nor is it worth your money to have major or even minor flaws repaired—the dealer can do repairs and maintenance at less cost than you can. So, practically, your only concern is that your car appears to be in reasonable condition.
How do you have your car appear to be in reasonable condition? Get your vehicle cleaned and detailed. It will usually cost you about $100 or so to have your vehicle professionally detailed, but a clean car looks well-maintained, and that can mean several hundred more dollars in trade in or resale value.
One of the first things a salesperson will want to know is whether you have a vehicle to trade. The reason for this is so they will know what they have to work with as they are showing you vehicles. This is especially dangerous if you are looking at a used vehicle since there is generally no price displayed so they can name whatever price they want.
Keep in mind, however, as with anything, a used car is only worth what someone will pay for it, there is NO SET VALUE per se.
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