Trade-In Value
The used car trade-in value can make all the difference for a prospective buyer leaving the showroom with exactly the car that he or she really wanted, rather than having to settle for something less desirable. The used car trade-in value can make up the difference in a large enough down payment so that the monthly car payments become more easily affordable.
Often when people are considering buying a new vehicle, they will try to sell the used car themselves first. This is not necessarily a bad idea, but the process would be considerably eased if, instead, they first found a dealer that would be willing to do a trade-in of the used car. As long as there are no payments left on the old vehicle, the used car trade-in value price offset could be quite considerable, and the sales tax also would likely be lower.
This is an important point, because in many states the sales tax due is calculated on the difference between the used car trade-in value and the price of the new vehicle. It could result in a fair amount of money saved.
Know the Used Car Prices
The prospective buyer intending to utilize the used car trade-in value to help offset the price of a new car, would best do what all other car buyers should also do. He or she should do some research beforehand and find out what the likely trade-in value will be before going to the dealer. A little time invested doing this research online will render the customer more knowledgeable and confident and in a much better position to negotiate the most desirable used car trade-in value and on the new car.
The dealer taking the trade-in will be estimating the amount that the used car will bring at an auction after it is cleaned up and reconditioned, if necessary. Online, the customer can find information and get an estimated value based on the year, make, and model of the vehicle. However, you may not find value on other factors such as the condition of the trade-in, of modifications, or of specific kinds of damage, though the dealer will. Still, the online estimates serve to give the buyer an estimated value as a good starting point from which to begin the negotiations.
By doing research online, the customer can find and compare rates on several different makes and models for any car trade-in that is desired. It could also be beneficial to find out the wholesalers' prices for similar vehicles. Wholesalers sell at dealers auctions, which is probably where the dealer taking the trade-in will also end up selling it.
What the Dealer Does
When considering the used car trade-in value for a new car purchase, a dealer will want to find out everything about the used car. Dealers use a number of different methods and tools to estimate the value of the old vehicle. Mostly, they are seeking, naturally, to determine whether they will be able to move the used car once it comes onto their lot. They will also be considering the value of the sale that could be made at an auction.
The dealer will ask questions about the vehicle, and will inspect it for obvious signs of damage or wear and tear. The agent will look for damage to the paint, and for evidence of rust and corrosion. The sales agent will conduct a quite thorough check of the vehicle's interior, under the hood, will check fluids and tires, and will ask about records of maintenance and use. Typically, the dealer will investigate whether the vehicle belonged to a cigarette smoker, for example, and will offer a lower price if it turns out that there is residual smoke.
The dealer will also run a Carfax report to check the vehicle's history of accidents and repairs. They will also certainly check the auction prices very closely.
Just as customers are expected and allowed to test drive the cars they are interested in buying, so also will the dealer want to test drive the trade-in to see how it runs before naming a price.
When the dealership finally makes an offer for the used car trade-in value, they will often not negotiate much. Some agents begin at rock bottom and allow the customer to bring them up a little as part of the tradition of haggling but will not significantly change their original position. The customer must know the used car trade-in value and should approach this phase of the process conservatively and with little expectation in terms of influencing the dealer's offer.
