When you're buying a new car, what's the first thing you think of?
betting it's probably that you want to be sure you're getting a great
Fair enough. But here's what you may not know: If you don’t cut a good deal
when you trade in your car, the dealer may actually make more money on
re-selling your old vehicle that the profit they'll get on the new models
they're selling you.
Why? Because you're more interested in that shiny new showroom model and
they're more interested in making money wherever they can. And sometimes,
the dealer's hands may be tied on the sale price of the new vehicle, while
they may have lots of scope to cash in on your old car.
For instance, almost certainly when you're negotiating a trade-in, the
dealer will start with a low-ball or wholesale offer. If you haven’t done
your research, you might be pretty happy if you can push this up a couple
of hundred dollars, when, in reality, there could be many hundreds or even
thousands still on the table.
December is the busiest month of the year for car sales (especially the
final week, after Christmas). So, if you're in the market for a new auto,
how can you get the most money for your old one?
Used Car Tips for your Trade-In
- First, make sure you know the true value of your car. There are plenty of
online sources for this such as Edmunds.com, Kelley Blue Book, and
AutoTrader. They'll give you two groups of prices -- one for "retail", that
is if you sell privately, and the other for trade-in. They'll also break
this down according to model, mileage and condition.
Be totally honest with yourself when you check this. No use pretending your
car is in "outstanding" condition when it's just "average", or you won’t
know what it's true worth is.
- Consider whether you want to sell privately or to a dealer (not
necessarily the one you're buying from). You'll get more money in a private
sale but you'll have the hassle of actually doing the selling yourself,
taking a scam risk with a dubious buyer, allowing someone you don’t know to
test drive, and then handling the title transfer.
- Prepare your car for sale condition. There's a bit of disagreement within
the auto retail industry about how much trouble you should got to in
cleaning up your trade-in and how much the condition affects value. But at
least put it through a carwash, clear the inside of personal stuff, vacuum,
and get rid of odors such as tobacco or pet smells.
Also, root out and have with you all receipts and service records for your
- Ask a dealer for an appraisal with a view to purchase. This doesn’t have
to be the dealer you plan to buy for. You're looking for a good trade
offer. If you have a local CarMax, the nation's largest retailer, they'll
usually give you an on-the-spot appraisal value for your car that'll stand
for seven days. It's usually non-negotiable so you have a good benchmark
for what you can get elsewhere.
- Be aware of other current factors that might affect the immediate value
of your car. For example, gas guzzlers will be out of favor when fuel
prices are high. Or a dealer with a high inventory of your model will be
less interested -- which is why some experts suggest you might try offering
your car to a different brand dealership than the make of your car.
Often too, month-ends are the best times to strike a deal, or when a dealer
has a special trade-in promotion.
- Also, be aware that trade-ins that are just a couple of years old or less
often don’t attract the best offers because their retail prices are too
close to those of new cars.
- If you ultimately opt to work with one dealer on both your purchase and
trade-in, keep both negotiations separate and start with discussions on the
trade-in. Remember the sales person you're dealing with already knows the
important figures on wholesale prices and what they can get on their car
lot or in auction, so your strongest hand is to make clear that you've done
your research and know the values too.
- Be honest in your negotiations. Don’t invent offers you claim others have
made because dealers know all the tricks. Remember, they know what they can
get for your car. And don’t bluff by pretending you'll walk away from the
deal if you don’t get what you want. You must really be prepared to walk
away -- and get up and do it.
- If you don’t get the trade-in offer you're looking for and decide to walk
away, visit other dealers to see who offers you the most. Some may have
lower inventory than the others and might be prepared to offer you more.
Remember, get the trade-in sewn up before you start discussing the price of
the new car. Experts say there's no value in springing the trade-in request
at the last minute after you've closed the deal on a purchase.
No Tax Advantage
By the way, some car value experts suggest you can make a significant
saving on taxes when you're buying a new car and selling your used car
through one dealer -- paying sales tax only on the difference between the
trade-in and the new car price.
HOWEVER, that's not the case in California where sales tax is levied on the
full price ticket of the new vehicle.
Check in with Us
Remember also that when you change cars, you need to notify your auto
insurance agent. There may also be a change in rates if the car you've
bought it significantly different in value and style from your existing
In fact, if you have an open mind on the make and model of the new car
you're thinking of buying, it's a good idea to check in with your car
insurance agent to get comparative quotes for different models.
Here at Aldrich Taylor, we're always happy to give our clients a range of
insurance quotes for different vehicles. Just get in touch before you buy.
It's as easy as that.