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Trade-Ins
One of the haziest aspects about buying a car concerns
the trade-in. Most consumers have 2 questions:
1) What is my car worth and
2) Should I sell or trade it?
Question 1 is the most difficult to answer, since, unlike
new cars, there is not a set value for used cars. There are guidebooks which give general parameters of prices,
but their name alone, "guide" books, indicates what they are--a guide. Two different cars of the same
year, make and model will have 2 different values, whether they have been on the road for 6 months or 6 years.
Mileage, upkeep and overall condition will all vary. As a result, since those are the 3 major components of the
value of a used car, what each car is worth will vary. There are a number of sources for the guide book information,
notably the Kelly Blue Book Used Car Guide
and others will give you the average wholesale or trade-in value of a particular vehicle. Be aware, though, that
most prices are for a "ready-to-go" vehicle, meaning that any reconditioning that needs to be done (or
high mileage) must be deducted from the guide book price. Remember: guides are just "average" prices.
They don't take into account specific variations in vehicles.
As far as the determination of value, the lowest estimate will probably be from the dealer from whom you plan to
buy a car (especially if you have secured a good price on the new car). In the majority of dealerships nationwide,
the average gross profit on a used car is higher than that on a new car, even though the selling price is less.
Why? Because dealerships make it a point to get trade-ins at the lowest possible price to ensure a higher gross
profit when sold. DO NOT trade your current vehicle until you have made a concerted effort to establish its value...doing
so could cost you hundreds of dollars.
Get a "buy number": Another potential source of information on the value of your car is from
local dealerships that sell that make. Crazy as it seems, a lot of dealers will pay more money for cars bought
from private individuals than they will for trade-ins. If you have a Chevy Suburban to trade, for example, take
it to a Chevrolet dealer and ask for their buy price. Tell them you aren't buying anything, but want to know what
they would pay for your vehicle as an outright purchase. You really aren't going to sell it to them (unless, of
course, they make an exceptional offer), but if you decide that you want to trade the vehicle, you will have additional
input as to its value. In fact, if the dealer where you try to trade the car offers you less, refer them to (in
this example) the Chevrolet dealer that gave you the "buy number."
Should you trade or sell? To some degree, that has a lot to do with the type of vehicle that you have
and the level of your patience. Obviously, you will almost always get more money for your car if you sell it yourself
(as you should--you sold it and deserve the commission!) The age and type of car has a lot to do with how easy
it will be to sell. A 10 year old pickup truck will be extremely easy to sell, while a year old luxury car will
be a lot more difficult to sell on your own. Why? For starters, most buyers for your 10 year old truck will be
paying cash. No bank will be involved, no credit applications will need to be taken and the deal can be consummated
on the spot. For your late model luxury car, most buyers will be financing, which can delay the sale at best (while
the buyer applies for the loan) and can, in the worst case scenario, kill the sale (if the bank turns down the
loan or tells your buyer that they are paying too much for your car). In addition, most buyers will feel comfortable
buying the older pickup truck from you. A $25,000 car bought from a private owner, however, will make some buyers
nervous. Time wise, you will likely be able to sell an older vehicle in a quarter of the time it will take to sell
a newer, more expensive vehicle, since the size of the buyer pool goes up as the price goes down.
 For many vehicles, you should definately sell them yourself. If you have an older vehicle, definitely try to sell it on your
own. Make it as presentable as possible. Remember, reconditioning is another reason that the dealer will pay less
for your car than you can get for it yourself. Recondition it on your own and put the money in your
pocket. Minor nicks and scratches can be covered by an inexpensive tube of touch-up paint. Clean the entire car,
paying particular attention to the interior--vacuum, shampoo the carpet and upholstery and use a vinyl cleaner
and dressing on the dashboard. Wash and wax the exterior thoroughly. Total investment in dollars: maybe $25. Total
investment in time: a few hours. Possible benefit: Several hundred dollars. NO ONE wants to buy a dirty car unless they can "steal"
it. Besides, a clean car indicates a well maintained car, and well maintained cars sell for more money.
As mentioned above, newer vehicles are a little different story, but don't think you can't sell yours on your own.
It most likely will take longer, but of course the potential gain is even more on a later model vehicle. Prepare
it as above (make it shine!) and take out an ad in the local paper (small community newspapers are often very effective).
Make a professional flyer for the car and park it where it will get the most exposure.
If you are forced to trade the car, be realistic but be firm. If you have a desirable car in good condition the
dealer will pay more for it--if you push them. Clean, well maintained cars are often in short supply, so the
dealer should pay top dollar for it. (They pay top dollar at auto auctions all the time!) Save them the trouble
of traveling to the auction by selling them your well maintained vehicle while squeezing every possible dollar
out of it as a trade in.
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