The truth of the matter is you will almost always get more money for your used car if you sell it yourself. For most people, though, it is often times easier and faster to trade in your vehicle when buying a new one.
However, new car dealers are not only shrewd sellers, they are also shrewd buyers, which is what you are doing when you trade-in a vehicle selling it to the dealership. And, though you will never get the full value of your used car from a dealership, with a little knowledge and shrewdness on your own part, you can maximize the price you get for your trade-in.
The Dealer’s Mindset
The first step in getting the most out of your used car trade-in is understanding why new car dealerships even bother with taking them. The reason is profit. New car dealerships actually make a bigger profit (up to 200 percent) from the used cars they sell than on the new ones.
The dealer’s profit margin is greater on used cars because dealers pay wholesale prices not retail prices for them. After only the minimal investment of a tune-up or detailed cleaning, they can turn around and sell them at retail.
Your Trade-in’s Value
The second step in getting the most out of your used car trade-in is knowing its value. You are, in effect, selling your car to the dealership. Just like you would do if you were selling your car to an individual, learning the value of your used car is imperative. This allows you to have a general price a reference point from which you can conduct your negotiations and prevents you from unwittingly accepting a deliberately low offer from a dealer.
When determining your trade-in’s value, be sure to factor in features that may positively affect the price, such as air conditioning, sunroof, CD player/changer, power windows, etc. Remember to also consider conditions that may adversely affect the price such as high mileage, dull or chipped paint, rust, chipped or pitted glass, worn or stained upholstery and carpeting, worn suspension, poor alignment, etc. The most important thing when determining your trade-in’s value is to be honest and not allow sentimentality to cloud your judgment.
You also need to keep in mind you are determining trade-in value (wholesale value) not retail value. The trade-in value of a car is basically the amount someone who plans to resell the car will pay it. Most common place is to look up your trade-in’s value on line at sites like Edmunds or in the Kelley Blue Book or the National Auto Dealers Association (NADA) pricing guides. These ballpark figures, however, because it’s easy to overrate your car’s condition and so many other factors (such as local market conditions) determine what it is worth to the dealership.
Your Trade-in’s Appearance
Remember: first impressions count. It never hurts to spend a little money to have your trade-in professionally cleaned. Providing the dealership with a good impression can help a lot with obtaining a higher appraisal value. Often times a messy car is equated (possibly wrongfully) to a vehicle that has been neglected mechanically.
Also, completing minor maintenance and repairs on your trade-in, such as lube, oil and filter changes offer a good impression at the time of appraisal. Quite often people are led to believe that they should fix every problem with their vehicle before taking it in to the dealership. If the repairs are minor, go ahead and fix them. Any major repairs, however, should be avoided. A dealer will take the reconditioning of your trade-in off the price but keep in mind that it cost them a lot less than it will cost you retail. It is better for them to take $500 off the trade-in value for a broken A/C instead of you paying $1,000 to have it fixed yourself.
