Inside Secrets About Trading-In Your Car
By Michael Royce
Consumer advocate, former car salesman
You're buying a new car or truck! But what are you going to do with the vehicle you currently own? If you're like many folks, you probably think that the best option is to simply trade it in to the dealership. If so, you may want to think again. Here's the inside truth of what happens when you trade-in a vehicle:
First, the dealership's Used Car Manager will appraise your car. And he'll probably appraise it at a value that may be hundreds, maybe even thousands, of dollars below the actual market value. But you may not ever see that appraisal amount. That's because the amount that the car salesman may tell you could be even lower than that.
If you accept his super-low offer, then the dealership has made a hefty profit and the salesman has made a nice commission since your car is worth more. Car salesmen call this "stealing from the trade" and it's a common ploy.
However if you try to negotiate his low trade-in offer, then he's got you where he wants you. Now you're negotiating on two figures: the value of your trade-in and the selling price of the new vehicle you're buying. If the salesman is also talking to you about your monthly payments and down payment, then he's got you negotiating on four figures. The more numbers you talk about, the more they can confuse you. It doesn't matter how sharp you are because the Sales Manager has the computer at his fingertips. He can jumble the numbers around any way he wants. It's very much like the old shell game at the carnival.
So if you don't trade-in your car, what are your options? You have four good choices:
1. Sell your car on your own.
Selling your car on your own is absolutely the best way to get the most money for it. And getting the most money for your car can be especially important if you still owe money on it to a bank or credit union. If you do owe, call the bank or financial institution and ask for the "pay-off" price -- the amount you'll have to pay to own the car outright.
To determine how much to ask for your car, visit the NADA Guides and/or Kelley Blue Book websites to get the current retail selling price for your vehicle. When figuring the value of your car, be sure to include all of the options and the accurate mileage. And since the true value of used cars is heavily influenced by supply-and-demand in the local marketplace, you should also check the classified ads in your local newspapers to see what others are asking for similar vehicles in your area.
Once you've determined how much to ask for your car, place a classified ad in the local newspaperor or online at websites such as craigslist. Then be prepared to show the car to prospective buyers. If you plan your "big sale" by having the car clean and ready to go and having the necessary paperwork on hand, you may be able to sell your car quickly. It can be a lot easier than you think.
2. Let a consignment dealer sell it for you.
There are used car lots that will sell your vehicle for you, taking a percentage for their trouble. If you don't want to sell your car on your own, this may be an easy option. Look in your local phone book under "Automobile Dealers--Used" and then call around to the various dealers to see which ones are willing to sell your car on consignment. If you do assign your car to a lot to be sold, be sure to get the agreement in writing.
3. Sell your car directly to a used car lot.
Simply drive in to any used car lot or the used car department of any dealership and ask them how much they'll give you for your car. The amount they offer may be well below the current Kelley Blue Book trade-in value. (Their offer will probably be about the same as you would get if you traded the car in to the dealership. However, doing it this way saves you the trade-in games.) If you do choose to sell your car directly to a used car lot, be sure to get appraisals from several different lots, then take the best offer. Selling your car to a used car lot won't make you a lot of money, but it's certainly quick and easy.
4. Donate your car to charity.
Donating your car to a charitable organization is a great way to do some real good for your community - and to get the benefits of a tax deduction at the same time. (Please note that recent changes in tax laws have restricted the amount you can deduct when donating your car to charity. Still, it's worth looking into.) To donate your vehicle, call your favorite charity and tell them you'd like to give them your car. In return, they'll give you a receipt - and their thanks. For more info about donating, visit the America's Car Donation Charities Center website.
If you still want to trade-in your car to the dealership, be sure to get at least a few appraisals from used car lots beforehand. That will give you a helpful guideline for negotiating. And no matter what you choose to do with your trade-in, remember to clean your car inside and out. A clean vehicle impresses even the most jaded car professionals. And that means more money in your pocket.
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