When you're buying a new car, what's the first thing you think of?
I'm betting it's probably that you want to be sure you're getting a great price.
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 car.
- 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 one.
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.