There are many reasons why used car trade-in prices are so low and as a person who is looking to get good value, you need to understand all of them. One of the best car trade-in tips anyone can give you is to consider many different dealers when going through with your auto trade-in. Some of them are looking for specific types of vehicles and this can help you get a higher price. So, why are used car trade-in prices are so low at most places? It has to do with the idea of leverage mainly.
The car dealerships have all of the leverage over you because when you choose a car, you are already captive. You have made a large decision and they know you want the new car. This means they can use their power to get you to pay a lower price for the trade-in. These car dealerships understand you do not want to go through the hassle of selling your car, which is why they can keep used car trade-in prices at such a low level. As long as you are coming to them with new car needs, they own all of the power.
Another reason why auto trade-in prices remain low is that car dealerships understand you are probably financing your next car. Because you are already taking out money in the form of a loan to pay off the new car, they figure you won’t mind having to get an extra $1,000 or something similar. If you were paying in cash, they might be more wary of giving a fair price, because there would be a much better chance you would decide not to make the purchase.
Ultimately, you have to do something to change the leverage if you want to get fair trade-in value for a vehicle. This means going to a dealer that needs your particular type of car on their lot or making sure dealers understand your willingness to sell your own car if necessary.
Use a vehicle valuation service like Kelley Blue Book to get an idea of your vehicle’s trade-in value. Dealerships try to purchase vehicles for as close to the fair trade value as possible. This amount is roughly equivalent to the wholesale or auction value of a vehicle. It is uncommon for dealerships to pay more for a trade-in than they would to purchase a comparable vehicle at auction. But remember that the dealership buying your trade will also result in them selling another vehicle. You may make this point when you are negotiating with the salesperson.
If there is any visible physical or mechanical damage on your vehicle, get it repaired before visiting the dealership for an appraisal. Physical and mechanical damage is the single biggest factor that can negatively impact your vehicle’s trade value. If there is a lot of damage on your vehicle, the dealership will assume the worst when it comes to possible repair costs. If your vehicle has excessive damage or has un-repaired collision damage, it may be best to keep the trade out of the transaction altogether.
Just as you should request multiple price quotes on your new car, you should request multiple trade-in appraisals on your current car. You can use competing appraisals to pit dealerships against each other and ultimately get the best trade-in value.
Most car shoppers complete research on their trade-in value online before ever visiting the dealership. Most shoppers are understandably biased when believing that their vehicle is in excellent condition. In reality, only a small percentage of used vehicles are in excellent condition, so it is unrealistic to expect the dealership to offer excellent book value for a trade. Remember that what is perfect to you might be imperfect to the new owner, and the dealership will complete at minimum a safety inspection on the vehicle, but they may spend over $1,000 to recondition and detail your vehicle for sale on the lot.
Some dealerships will offer you less for your trade but may be willing to discount the new vehicle more than others. When this happens, it may be a case of the new car manager providing a large discount but the used car buyer being uninterested in your car. In any case, having a larger top line discount may still give you a better overall deal. If you get less for trade at one dealer but the overall deal is better, the best choice is to go with the lowest overall bottom line price.
If you are having difficulty getting the preferred amount for your trade, you may want to consider selling the vehicle privately. Private party sales bring more money than trade-ins, as you do not have overhead and reconditioning costs to factor into your price.