What Is My Trade-In Worth?
Before you decide to trade in your old car or truck
you need to do some research. The place I want you to go is
Yahoo! Autos. When you go
there click on used cars and then the link to appraise your
car. Now select all the choice to bring up your vehicle
including all your factory options. Do not choose any after
market installed options. Why not installed options you ask?
Because we do not care what you added on to the car, factory
options are the only one that make a difference.
Now that you have made all your selections there will
be a place to choose your condition. Read the descriptions and
honestly select the proper
condition. Then go ahead and click get your Pricing Report.
Your report will have 3 columns that will show Trade-In Value,
Private Party Value, and Retail.
This Trade-In Value is usually very close to your actual
value, as long as you have selected the proper options and
condition. The Private Party amount you should be able to sell
it for yourself to a private party. Obviously the Retail value
is what a dealer would sell it for.
Now it is my turn, I will look up your vehicle in a
publication called the "Black Book" it a dealer version of the
Edmunds Report. The amounts are usually the same or very close
to your pricing report. I will start with that number and then
take a ride in your car and start looking for anything I could
use to lower that number. First I will look for the obvious
things like body damage, tire wear, scratches, dings and any
evidence of bodywork. No matter how good a body shop repairs a
vehicle that was in an accident I can usually find the
evidence. The older the vehicle is, the less I take a good
repair into consideration (but we won't tell you that). The
last step is to stand back and try to figure out how much I
will have to spend in order to put it in saleable condition to
sell on my lot. If I feel that I have to spend money on
anything other than detailing and servicing I will deduct that
from the value.
Now I have a good idea what your vehicle is really worth,
so I will give your sales person a number that is 20-30% less
than the actual value (a large number of people will accept
this number if the sales person does a good job of pointing out
the flaws in your trade).
Some dealers also work closely with Auto Auctions and have
online access to what vehicles have sold for at auction. This
is especially a valuable tool when I am looking at a newer or
unusual trade. i can get an idea what I can sell the vehicle
for at auction if I can't sell the car on my lot.
My objective is to get you to agree on a value for
your trade-in that is lower than the actual value. The lower
the better.
When we take your trade in on a purchase we put the
agreed amount on the paperwork that you can see, and then we
book (see example below) the actual
value.
Example: If we agreed on your trade value at $12,000.00 and the
actual value was $13,000 , I would book your trade for $13,000.
So if the profit on the vehicle purchased was $1,000 there is
an additional profit of $1,000 on your trade-in. Now the
transaction nets a $2,000 profit. Your sales person's
commission is based on the $2,000 profit. So you can see the
motivation for the sales person to get you to accept a lower
amount for your trade. They can possibly double their
commission. Most customers will accept less for their trade-in
if they feel they got a good price on the car they are
buying.
An advantage for you when trading in a vehicle is that in most
states your tax is based on the purchase price less the
trade-in value. So you are only taxed on the difference.
Upside Down or Backwards: This is a
situation where the amount owed is more than the current value
of your trade-in. When you are upside down you will need to
come up with the difference in cash to add to your down payment
or if your credit is good enough the amount can be rolled in to
your purchase depending on how much your are upside down.
Get Your Pay-off: When trading in a
vehicle that you owe money on you should get your pay-off
amount from the bank or wherever the vehicle is financed. You
should do this when you are doing your research that we talked
about in Time to go
Buying. A phone call to the bank or lender will get
you the accurate answer in a matter of minutes.
Good Luck....you will do much better know how it works.
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