Keys to Negotiating a Used Car Trade In Value Last Updated On: November 30, 2016
How To Trade In A Car and Get The Correct NADA Trade In Value
- 1 How To Trade In A Car and Get The Correct NADA Trade In Value
- 2 Step 1: Research Auto Trade-In Value
- 3 Step 2: The Best Time to Trade In Your Car or Sell Your Car Yourself
- 4 Step 3: Maintain the Vehicle
- 5 Step 4: Negotiate Your Auto Trade-In value Separately
If you want to buy a new car, chances are you are going to want to trade in your current vehicle and get the most auto trade-in value.
To start with, it is important to know the actual used car trade-in value. Don’t rely on the car dealers to be honest with their evaluation of your vehicle. NADA trade in value is a good place to start, but if you are trading in an older automobile, the last thing you want to do is immediately accept the value the dealer gives you for your trade.
Car dealers will try to avoid giving you nada clean trade in value because it takes away their profit margin when they resell the car. If they do offer you close to NADA, they will bump your new car price offer up without you knowing about it to compensate for offering you the right car trade in price. This is why most car dealers will ask you if you are trading a car in when you ask about car prices at a car dealership.
You are going to want to know how to negotiate car prices for the greatest used car trade-in value without getting ripped off on the deal.
Knowing some car trade in tips is an important part of a new car purchase or turning in your leased car without wear and tear penalty fees.
Unfortunately, for most of us, how to trade in an automobile for the correct value, turning in a leased car with no penalties or negotiating a trade-in price with a car salesperson is a foreign concept. It is hard to know what offer to make to a new car dealer and to know when your request is unreasonable. Car shoppers try to avoid this awkward situation and go along with what the car dealers offer.
Don’t choose this route or you will lose a lot of money in this car deal. Get ready to learn how to trade in a car and get the most for it, the simple art of car price negotiations.
Should I Trade In My Car At The Dealership?
One option you should keep in mind if you know what your car is worth is selling your vehicle privately. It will take longer and be less guaranteed than trading your vehicle in at the local dealerships, but it will bring you a higher used car value for your current car.
If you have plenty of time, a private sale is the best option. However, If you are having mechanical problems or your car is in poor condition, it is better to trade in your current vehicle at the dealer and save the repair money for your new car purchase down payment. If you are trading a car in with a loan and your intent is to get out of the high payments you are making or to get something less expensive, consider refinancing. Refinancing your car loan can lower your payments or even recapture some of the equity in the car. We can show you how easy it is to refinance with bad credit.
Trading in a car you owe on may take some planning
You may be thinking of trading a car in with a loan you are still paying on and planning to roll the loan into your next car loan. This type of thinking will get the old car loan paid off, but it will leave you with negative equity in your new car loan.
The used car dealer will offer you lower monthly loan payments in exchange for a longer term to pay the loan off. This type of trade in should only be done as a last resort because it will always leave you upside down with your payoff. While paying more for the new car loan, it will leave you with a car that will probably loose its used car trade-in value before the loan is paid.
Trading in a financed car is never a sure thing. Banks and lenders look at trading in a financed car differently. A lot will depend on the quality and resale value of the car and your existing auto loan. Most banks will only let the dealer sell over the NADA trade value by 15% of the loan value on cars. That does not leave much to pay down the remainder of your current loan.
How much is my car worth?
Before you start negotiating car trade in prices with a dealer or private purchaser, you will want to find out exactly how much your trade-in is worth. Dealers make a great deal of their income from money they receive from trade-ins and salespersons know how to negotiate down to improve their profits. You need to prepare to get the best value out of your car. You need to know how to counter their tactics.
Step 1: Research Auto Trade-In Value
The most important factor you are looking for is the real average value of your vehicle. There are two leading sources of vehicle auto loan values; these are the Kelley Blue Book 1 and the National Automobile Dealers Association.
These two resources will consider some factors about your vehicle, including the mileage, extras and options, demand and current condition of your vehicle. This is where keeping up the maintenance will pay off.
Trade-In Value vs. Resale Value
With these factors in mind, each resource will give you an average value you could expect from selling your car to a private seller. Also, with a lower value, you can expect a dealer to offer less for the trade-in value.
Taking dealer trade-in value for your car will cause you to forfeit some of your cars resale value
Remember the dealer trade in value is not what your car is worth but the amount the dealer will give you to re-sell the vehicle for you. When negotiating trade in value, these should be considered the minimum values; never accept your trade-in value for less than these amounts. If you do, you are handing profit to the dealer with nothing to show for it.
Online research is a good starting point to get the trade in value estimates and loan value on cars, but you should also check local car ads and auto dealers to find out what they are selling a similar vehicle for in your area.
While you are at it, you can have them check your car and estimate the value without letting them know you are planning to buy. At that point the car salesperson will want to know what car you are shopping for so he can start to work the price he will give you on your trade in back into the selling price of the new car.
It’s just another way to cheat you out of the full value of your trade in. The amount they give you will be small, and the value they sell for will be high; this is essentially your price range. When you go to trade in your car, ask for the dealer sale price and negotiate down from there. Stay as far above the low-ball estimates as you can.
Step 2: The Best Time to Trade In Your Car or Sell Your Car Yourself
how to get the most for your trade-in
When is the best time to trade in vehicles? What sort of vehicle are you trading in?
Some vehicles have high and low points throughout the year. A dealer is unlikely to pay you top dollar for a convertible right when the snows are hitting in December. The dealer will be unlikely to sell such a vehicle until mid-spring at the earliest, so they will consider it a liability if you try to sell in the winter.
Consider selling the car yourself if the gas prices are down
Likewise, consider the fuel efficiency of your vehicle. Old gas-guzzling trucks and large SUVs do not sell well during times when the gas prices are high, and the economy is weak. Conversely, hybrids and very fuel-efficient vehicles can sell for a premium when you are picking a time when the gas prices are high. It may not seem like much of a difference, but the timing can change the price of your vehicle by ten percent or more.
Sporty, stylish automobiles sell better than vehicles that have gone out of style. There is nothing you can do to influence popularity trends. You have to watch them and jump at the chance to sell if there’s ever an opportunity when your vehicle is in demand. Some cars simply never reach that point, but if you have the luxury of time, you can wait for such a trend.
Step 3: Maintain the Vehicle
Maintain the value of your investment!
Before you drive to the dealership to trade your current car, give your car a thorough once-over.
Wash dirt and grime off the steering wheel and door handles. Scrub stains out of the seats. Clean the windows and windshields until they sparkle. Vacuum out the dirt and dust that accumulates on the floor and under the seats and also replace the floor mats, if yours are in poor condition. You might even consider replacing some of the interior finishing if it is cheap enough to do so.
Wash and wax the exterior, touch up any scratches in the paint and consider popping out any minor dents and dings in the body. Shine the wheels and make sure the tires are not bald. Tires have become so expensive that needing to replace them will drop the value of your car. Many car tire sales locations sell good used tires cheap. If your car’s tires are in terrible shape, then now would be a good time to replace the bad ones with a better set of used tires.
If you are trading it in for a new car, you should also take your car in for a maintenance check if it is not running correctly or has any warning lights on. If there are any obvious repairs needed the dealer will reduce the trade in value. If you are selling your old car car yourself, Here are some of the things you should ask to have individually checked or serviced, to make sure you get the current maximum quality of your old vehicle.
- Get the oil changed and the air and cabin filters cleaned or replaced
- Top off the coolant tanks.
- Rotate your tires and top up the pressure. If your tires are bald, be aware that this will greatly diminish the value of your vehicle, as the dealer or the buyer will need to replace the tires on their dime.
- Check other fluids — brake, transmission, power steering — and replace as needed.
- Check the belts, wiring and hose quality, all of which decay faster than metal parts. These can be both cheap and easy to fix on your own, or with a minor investment at a mechanic shop.
Make sure you keep a receipt for this maintenance, as leverage for your selling negotiations. Dealers like to see a maintained vehicle; it is an expense they do not need to pay, and it is a potential selling point for a buyer.
The Importance of a Clean Car
For getting the best trade-in value of your present car or keeping the value of your new car for many years, it is important to do some regular maintenance to protect your investment.
Protecting Your Car from Corrosion
It is not hard to see the destructive effects of corrosion. During winter, many roads are coated with salt. Unfortunately, salt can corrode paint and cause rust to form on vehicle parts, and it greatly diminishes the value of a car. Many vehicle owners never notice that the bottom of their vehicle has been overrun with rust.
The bottom of your car should be rinsed with a high-pressure washer like the ones found at a do-it-yourself car wash facility. Rinsing the bottom of your vehicle periodically and before you trade it in or sell it privately will also remove any leaking oil residue and grease from the under-frame.
The Importance of Clean Interior
To keep the interior clean, you should wash the inside portion of your windows, remove dust from the dashboard, vacuum the seats and remove garbage. You would be surprised to find out just how much trouble a small amount of debris can cause.
For example, a few fries can start to grow mold, which can spread to your vehicle interior, and you have probably heard that mold is not good for your health. If there is too much moisture in your car, then mildew can form. Dust can be just as harmful as the mold. When you inhale dust particles, you can get sick, which is why cleaning is so important.
Cleaning the Carpet and Rugs
Most modern vehicles are built with carpet interior, and they come with small carpet rugs. A great tip for cleaning carpeting and rugs involves the use of stuff brushes and compressed air. You should use compressed air to blast particles out of the crevices in your vehicle interior. Next, you should use a vacuum to capture all of the debris that you blasted out with the compressed air. It is important to use a stiff brush because it will loosen dirt embedded deep into the upholstery. To clean leather seats, you can use aloe and conditioner.
When it comes time to trade in your vehicle, you do not want to miss out on a good trade in offer because your car was not as clean as it could have been. If you are planning to sell your car, negotiating car prices accuracy can get you more money for your down payment. In turn, you will save much money on your payments.
Step 4: Negotiate Your Auto Trade-In value Separately
If you are trading in your car and will be arranging for financing and buying a new car all in the same transaction, please take time to read through these pages we have provided to help you with negotiations and keep you from being taken advantage of during you new car purchase.
- Auto Loan Payoff Calculator
- How to Avoid Dealer Scams
- Your Automotive Credit Score
- How to Get A Subprime Auto Loan
Start Your Negotiations With The Car Trade-In Price.
The car dealers will not like this approach, but if you begin with the new car loan, you will be giving the dealer financial information they can use to low-ball you on the value of your trade-in.
Start with the trade-in, as though you are only selling your vehicle, Don’t settle for anything less than the correct trade-in value of your car.Then you can move to negotiating the new car price. Hopefully, you had gotten a pre-approved car loan before you went to the car dealership.
Most dealers will try to avoid this because they want to work down the value of the trade
Once you have a reasonable value for your trade-in, then you can go ahead and find financing. You may even prefer to secure funding from an outside auto lender, bank or credit union, though if you have bad credit, your options for a subprime car loan may be limited. We suggest a loan broker like Valley Auto Loans so your loan request can be evaluated by many lenders with only one application. This way you get the best deal for your situation, and your credit check is only run one time.
Learning how to play the new car price game is essential. You need to know how to negotiate a car price correctly. Salespeople are assertive, and they have many tricks up their sleeves to keep you engaged even when you know you are getting the short end of the stick. There are two primary rules you need to bear in mind:
- Open negotiations by stating that you have done your research. This tells the dealer that you will be stubborn and that you are more likely to walk away from a bad deal.
- Never give the dealer your keys. If they have your keys, you are trapped at their mercy until they return them. If you keep them, you are telling the dealer that you can and will walk away if the deal turns sour.
Keeping these rules in mind will help you set up a presence of authority and knowledge, something that dealers must work around when they negotiate. Maintain this assertive position, and you will have the upper hand in negotiations.
Of course, an auto dealer can always turn your deal down; don’t immediately jump to a low-ball figure if they do. Hold out for as much as you can get. This may be a good time to check with other dealers. You will always get the best deal by shopping around because the other dealers will try to beat the other dealer’s offers.
Be honest with yourself and your evaluation of your car trade in price. If you want the maximum value possible, you will sell the car to a private buyer. On the other hand, if you wanted the low-ball price the dealer will offer you, wouldn’t have gone to the trouble to research and clean up your car before your visit. There is a fine line you must find between optimism and foolishness.
Do not worry about your credit when negotiating the auto trade-in value
Your credit does not affect the value of your vehicle, nor should it influence the sale of your vehicle to a dealer. In fact, using a trade-in is a good way to boost the financial power you have for bad credit negotiations. Explaining your trade-in to a third-party financier will increase your chances of loan approval at a better rate than you might find elsewhere.
A new car is within your reach with a trade-in, no matter how old and worn out your vehicle may be. If your vehicle has any used car trade-in value whatsoever, and you are considering trading it in, knowing how to negotiate a car price can help you maximize that auto trade-in value and assist you in purchasing a new car.
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Sources and Citations:
- http://www.kbb.com/ ↩