Trading in Your Car

 

One of the questions you’ll be asked early on is whether you have a trade-in. The correct answer is always NO – you are not planning to trade in your old car.
In the usual buying situation – which is top down - the dealer can inflate the cost of your old car way above its value. I had some people refuse to buy a new car from me because not enough was offered for their old car, and I have heard many more people brag about how much they got for their trade-in. They don’t realize the inflated value is just a subtraction off the new car sticker price to get them to buy. Some people are so in love with their old car that the salesman can sell them a new car on the inflated value of their trade-in.
Since you are buying bottom up, these dealer tactics won’t work for you. Once you have completed your car price negotiation, if you really want to just get rid of your old car and have the dealer take it off your hands, then ask, “By the way, if I were to trade in my old car, how much would you give me for it?” Now you will get its true value, which is the wholesale value.
What if you still owe on your car and now you are going to turn it over to the dealer? First, call your loan company and get the payoff amount. When you turn your trade-in over to the dealer, get in writing when they will pay off your loan. Unfortunately, you are responsible for the loan until it is paid off, and there have been instances where a dealer has not paid off the loan in a timely manner – and worse. You will at least have paper proof.
Many of you may already know how to determine the wholesale and retail value of a used car, so this section is for those who don’t. The guides commonly referred to by consumers are NADA and Kelley Blue Book. You can get car values online or use a real book at the library – they should have the one used in your area. Locate your make, model, year, equipment, mileage plusses or penalties, and condition to determine the wholesale and retail value of your car.
Wholesale is the price you might expect the dealer to offer. Retail price is what the dealer might list it for when he puts the vehicle on his used car lot. There is another price called Private Party Price, which is the price a car might sell for from a private party. Use these figures as guidelines.
The dealer is not obligated to give you the wholesale price. He will know which trade-ins are likely to sell well and which will take up space. Even though the Blue book might say your car’s wholesale value is $12,000, if the dealer can buy it at aution for $10,000 – or he know the car lacks consumer interest, he is not going to offer you the Blue Book price. Some cars are hot – and some are not.
It is also possible he may try to give you a lowball price. You can prevent this happening by taking your car to several dealer lots and asking what they would give you.
Rather than use KBB or NADA, dealers may gauge prices by the Black Book, which is a subscription service for dealers that gives them current wholesale selling prices from auctions around the country. The CarQuotes website will give you a free Black Book quote.
You will almost always get more out of your car by selling it yourself.
Don’t expect to get Bluebook retail price, but something in between that and wholesale value, which will likely be several hundred dollars more than the dealer will give you. See the Private Party Price for a reasonable selling price. Your asking price should be higher; then come down to the Private Party Price.
If your car has been well maintained and is in demand, this is a real plus and could bring premium dollars. When I have bought used cars from their owners, I was always willing to add a few hundred dollars for a car that had been garaged, maintained, and serviced regularly. People who take excellent care of their cars will have all the purchase and service records to show you.
You should ask to see a person’s license before allowing him to test drive your car, and write down the pertinent information. This will help prevent someone stealing your car or parts off it. Also, you should require payment as a Cashier Check (same as cash). You will need your owner’s title to sign over to the buyer.
There are reasons you may not want to sell your car yourself; e.g., you may not want strangers calling or coming to your door or allowing strangers to drive away in your car for a test drive. Also, if your state is one that lets you deduct your trade-in value from the sales price of the car before figuring sales tax, there can be a savings there. For example, if your trade is valued at $10,000 and your state sales tax is 7%, you will save $700 in sales tax. Your state department of motor vehicles can give you this information.