Each of the following
Trade-In FAQs are answered in detail below...
1. What is the most important thing I should know when
I go to trade-in my old car?
2. What is a wholesale value and how is it determined?
3. Won't dealers try to get my car at a price below wholesale?
4. Won't dealers always make a purposely low first offer
on my used car?
5. What does it mean when dealers talk about trade-in
"allowances", when I try to trade my old car in for a new one?
6. Should I have my old '92 Camry professionally cleaned,
inside and out, and repaired before I sell it?
7. Would I be better off paying for a professional appraisal
on my 1994 Pontiac Grand Prix? It only has about 89,000 miles on it?
8. How do new car dealerships get the cars, trucks and
campers, etc., they sell on their used-car lots?
9. I've heard that dealers mark up their used cars 10
times, or more. Why can't I get better than a wholesale price for my
car?
10. How important will the tires on my Volvo be when
I go to sell it?
11. The suspension in my old Mercury is shot. Should
I have it repaired before I sell it?
12. Do I have to worry about my fluids before I sell?
Trade-In FAQs
1. What is the most important thing I should
know when I go to trade-in my old car?
Having a good idea of what your old vehicle is worth is the all-important
fact you should attain before trading-in your old vehicle.
Why? Because you should develop the mind set of, "I'm selling my vehicle,"
rather than merely taking what a dealer will give you for it in a trade-in.
As a seller, you'll need to know what your vehicle is worth in order
to price it. If you price your vehicle too low, you'll leave good money
on the table; price it too high and more than likely you won't sell
your vehicle, especially at a dealership, unless they make it up on
the selling price of your new car.
It is the wholesale value (not the retail value) that you will need
to determine when trading-in a vehicle to a dealership.
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2. What is a wholesale value and how is it determined?
The wholesale value (sometimes called trade-in value) of a used
vehicle is the value someone will pay, who plans to resell that used
vehicle.
The Kelly Blue Book, the Auto Market Report, the NADA Official Used
Car Guide, the Galves Auto Price List and the Canadian Black Book (some of which
can be found at libraries, banks or credit unions) are useful guides
in determining your used vehicle's wholesale value, but they are not
absolute.
Regional and local areas vary a great deal in wholesale values. What
vehicle is being priced at what time of the year also plays a part in
evaluations. Furthermore, some markets are starved for certain makes
and models, while other areas could be glutted with those very same
makes and models.
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3. Won't dealers try to get my car at a price
below wholesale?
Yes, usually. But try three dealerships, and then add 10-15%
to the average of the three offers. Then you'll have a good idea of
your wholesale value from which to measure other bids.
If the condition of your vehicle is not good, has high mileage and
in need of mechanical work, dealerships might not want your vehicle
at any price.
In such a case, one might try used-car dealers, but the kind of money
they would offer, in most situations, would only be a step up from salvage
prices.
The painful truth is that selling your car, truck or van to retailers
or trading it in is a risky business and most sellers do not receive
what their vehicles are worth. Dealers know their business, usually,
better than you and your friends know the used-car business, as well
as they should.
Did you know that most new car dealerships make more money with their
used cars than with their new car business? Their markup ceiling on
new car sales range between 12 and 20 percent; their used-car markups
virtually have no maximum limits, only practical, and those range between
300-400 percent.
Dealers will try to convince you that selling your used-car yourself
just isn't worth the hassle, dangers and the possible legal entanglements,
and they might be right. (See Private
Sales FAQs)
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4. Won't dealers always make a purposely low
first offer on my used car?
Yes, that is often the case. A low, unrealistic, first offer
serves the dealer in two ways.
Car salespeople know that most people consider their vehicle to be
worth more than its real value. Vehicle owners get used to their old
vehicle, and in time become blind to its faults and defects. Faults
such as ragged interiors, sagging headliners, a blemished body or fading
paint are easily rationalized by vehicle owners as simple and cheap
to fix. Defects that are serious functional or structural problems are
typically passed off with, "what do you expect from an eight year old
car with over a hundred thousand miles on it?"
Well, dealers expect problems with those kinds of vehicles.
In short, many people love their old cars and trucks as much as their
family pets; to them the frayed upholstery, rust and dings have either
become invisible or seen as "war wounds" to be admired, and they usually
want more money for their "pet" than it's actually worth.
So a dose of harsh reality is customarily the dealer's first ploy to
bring the owner "down to earth" with a crash.
Slammed into an angry state the owner will often respond as the dealer
wants, by asserting, "my car is at least worth $700.00."
When that happens, the dealer has gained a tactical advantage in the
"horse-trading duel". The $700.00 quickly becomes the figure the dealer
will work down from, if it is near the actual wholesale value of the
horseless carriage.
Always attempt to get the dealer to be the first to make a serious
offer. That way, you have the tactical advantage even if his first serious
offer is low. It's their first real offer you want. From there you can
probably get a bump upwards.
Your best, immediate response to a dealer's purposely low, first offer
is to be calm, smile and pretend to walk away, saying, "well, I'd need
considerably more than that."
If the dealer does not answer you, keep walking and drive to another
dealership.
Some classic battle lines are drawn between dealers and used-vehicle
owners, who want a better vehicle. Dealers almost always win these battles,
and they win them in the bamboozling fields of trade-ins, where the
owner frequently becomes confused and then surrenders.
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5. What does it mean when dealers talk about
trade-in "allowances" when I try to trade my old car in for a new one?
The allowance stratagem is used by dealers who suspect what you
receive for your old car is more important to you than the discount
off the sticker price of the new vehicle you are buying.
Be warned. A healthy allowance for your used-car will remove most,
if not all, of the discount you could have gotten on your new car purchase,
but you won't likely notice it.
Allowances confuse the two main issues you want kept separate. The
first issue is to sell my used car. Then I might buy a new car from
you, Mr. Dealer-wheeler.
Tell the dealer you are not interested in allowances; you want to know
how much they will pay you for your used-car even if you don't buy a
new one from them. It's actually best to first sell your used-vehicle
in the dealership used-car department, then come back the next day and
shop wisely for your new car.You will save the most money this way,
even if have to cab it for a few days or rent a car for a few weeks.
The buying and selling of vehicles occurs 40 million times a year in
the United States and Canada, and a major percentage of those transactions are
from trade-ins. Trade-ins keep dealerships in business; and buyers like
them because the whole buying and selling process is made so easy for
them. Moreover, most buyers are commonly satisfied with their trade-in
transactions, thinking they got a pretty good deal, when they did not.
Dealerships love and thrive on such cooperation from buyers. Like vampires,
trade-ins are their life's blood.
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6. Should I have my old '92 Camry professionally
cleaned, inside and out, and repaired before I sell it?
Only if you can keep those costs relatively low. A detailed
and repaired vehicle is more important when selling it than when trading
it in. You'll have trouble doing either one, however, if your vehicle
doesn't run. Would you buy a vehicle that doesn't run?
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7. Would I be better off paying for a professional
appraisal on my 1994 Pontiac Grand Prix? It only has about 89,000 miles
on it.
Probably not. For people who have high end, well maintained
vehicles, a professional appraisal would make more sense. Professional
appraisals cost from $150.00 to $300.00. If your vehicle doesn't warrant
such an expenditure, have its wholesale value determined for free.
Drive your used-vehicle to three or four, franchised dealers, who have
used-car lots. Do not talk to them about trade-ins. Merely tell them,
"I'd like to sell my vehicle to you. What will you give me for it?"
Average out the quotes and add 10% to it, and you'll have arrived near
the true wholesale value of your vehicle.
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8. How do new car dealerships get the cars, trucks
and campers, etc., they sell on their used-car lots?
Primarily from trade-ins and some from wholesalers and dealer auctions.
They purchase, with cash, very few vehicles from individual sellers.
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9. I've heard that dealers mark up their used
cars 10 times, or more. Why can't I get better than a wholesale price
for my car?
Dealers do not mark up their used vehicles that much. Three
to four times mark up from cost is about the most they would dare. Ask
yourself why would a dealer buy your car, above wholesale price, when
they can buy your year, make and model, perhaps even in better condition,
from wholesalers or at dealer auctions.
Dealers will not spend more on a used-vehicle (to include re-conditioning)
than they can wholesale it for themselves; if they fail to retail it
within 60 to 90 days.
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10. How important will the tires on my Volvo
be when I go to sell it?
Make sure all of your tires are of the same size and type. A
mixed or mismatched set of tires on a used vehicle begs for a low selling
price. A bad match of tires detracts from a vehicle's attractiveness,
are dangerous and do indicate possible rear axle problems.
Irregular tire wear is another tip-off of poor maintenance, since uneven
tire wear, outside or inside, could mean front end alignment problems
or even that the vehicle has had frame damage.
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11. The suspension in my old Mercury is shot.
Should I have it repaired before I sell it?
Dealers will check your suspension and if your Mercury needs new
shocks, they wonder what else you've neglected.
All they need do to test your suspension is to quickly press down hard,
several times on the corners of your Mercury, then let up. If your car
continues to bounce, they'll have all the proof they'll need to devalue
your Mercury. The few hundred dollars you'll need for new shocks may
or may not be worth the price. Do you have a friend who can install
shocks?
By the way, dealers will also tug on your front tires trying to detect
play in the wheels, bad bearings or suspension joints.
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12. Do I have to worry about my fluids before
I sell?
Yes. Coolants that are not of a constant color means trouble.
A secondary color like red, means rust. A powdered residue on the radiator
indicates a leak.
Oil that has a lot of sludge in it tells a dealer that your car will
probably soon need an engine job.
Dealers will also look under your hood for leaks of motor oil, brake
and transmission fluids. Orange colored transmission fluid, that smells
burned, means you'll need a transmission job or settle on selling your
car for less than you wanted.
Most dealers will test drive your car and then go under the hood. They
will be especially concerned about oil on the engine, because that is
a common indication of gasket problems and they will probably decline
buying your used-car at any price.
You will also be well advised to ensure that your muffler, catalytic
converter, tail and engine pipes are all well anchored to your under
carriage, with the proper attachments and hangers.
Additionally many dealers will perform an inexpensive pressure test.
They'll hold a piece of wood or cardboard against the end of your tailpipe,
while your engine is running. If your vehicle doesn't stall and popping
noises explode loudly, there is probably rust through out your exhaust
system and lethal exhaust fumes could be filtering into your passenger
compartment. Quickly do something, if you have this kind of problem.
Your life and the lives of the ones you love most are worth more than
mere money. |