Research shows that the price of a new car increases the average transaction price by about a percent for deals that include trade-ins compared to deals without them.
An increase of 1 percent may not seem like much, but it can add up, especially as the value of the trade-in increases from an economy car up the scale to a large SUV or luxury car. On average, the dealer makes $250 more on trade-in deals, but depending on the car, it can be much more.
So how do you avoid a mark-up if you have a used car to turn around?
You have two options:
1) sell to a private party or
2) do a dealer trade – but choose wisely. If you have patience and are willing to spend the time, you can get about 10 percent more selling your used car to a private party. But be prepared to encounter potential buyers who give extremely unrealistic offers and may waste your time. And before jumping headlong into that magical 10 percent bump, be sure to do some research on the tax laws in your state – it may actually be beneficial to do the trade-in deal. Many states, such as California, require you to pay the tax on the full price of the new vehicle at the time of purchase, regardless of the value of your trade. However, other states, like Wisconsin, require you to pay the tax only on the difference between the new vehicle purchase price and the trade-in value.
- First, when buying a new car, keep negotiations focused on the new vehicle alone. Only after you settle on a purchase price should you start negotiating the terms of a potential trade. This approach is simple, straightforward, and allows you to check your new car deal against online price reporting services without the complicating factor of the trade value.
- Second, getting a fair price for your trade-in is no less of a negotiation, and researching its value should be considered as important as researching the purchase price of the new car. There are many reputable used car valuation resources on the web (including a used-car valuator provided by the AskPatty Car Buying Service. Powered by ClearBook, all you have to do is enter your year, make and model, and answer a few questions about the condition of your vehicle, and you'll find fair market values for your used car), so check them.
- Third, you can always visit CarMax for a written offer that's good for seven days; if you can't get a similar price from your dealer, then you can always sell it to CarMax. CarMax is an excellent source for in-person used-car valuations, as their appraisers are specially trained and boast an average of five year's of appraising experience across an average of 5000 used cars. CarMax appraisers will give car a detailed evaluation that includes a test drive, as well as a thorough inspection that takes into account your car's year, mileage, make, and model; its condition inside and out; any aftermarket parts and/or modifications; and any additional options and features. In addition to valuing these benefits, their appraisers will also inspect for frame or flood damage, and will check your vehicle's history report. Finally, they will compare your vehicle against current market conditions, such as national sales trends and auction data.
- Fourth, if you trade in against your new car at the time of purchase, the value of your trade-in can be applied against your down payment, reducing the amount you may need to finance, lowering your monthly payments, and ultimately, the amount of interest you pay over the life of the loan. It may be easier to combine all the steps into one financial transaction. Otherwise, you could be stuck with your old car sitting in your driveway for however long it takes you to sell it. And even if you sell it and apply the proceeds to your new car's loan principal, it won't adjust the monthly payments; you'll just pay off the car slightly sooner. Depending on the term of your original loan, that could be years from now.
- And finally, good luck! After you weigh the pros and cons, you may determine it’s just easier to take the price ding and hand over your keys at the time of your new-car purchase. On the other hand, getting a great deal always requires a little extra effort, but in the end you may be able to save yourself a bit of money for your effort!
Are you shopping for a new car?
Streamline your buying process with the AskPatty Auto Buying Service, where you can research new cars and get negotiation-free Guaranteed Savings (available in most states) to save yourself both time and money.
from Ask Patty - Automotive Advice for Women http://ift.tt/2ajCUhz
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