| The most complex aspect of buying a vehicle from a | | | | believing they are getting $10,000 for the trade and a |
| dealership is working with the trade in. Despite most | | | | modest discount on the truck, they are more inclined to |
| consumers' best efforts, it's often difficult to get a | | | | pull the trigger. |
| straight answer to the question, "How much for yours, | | | | It isn't some evil dealership scam. It's simply adjusting to |
| and how much for mine?" | | | | the buying habits and preferences of the consumers. |
| It usually isn't an attempt by car dealers to be obtuse | | | | Still, there is a way to find the true value of a trade. |
| or really "stick it" to the customer. In truth, most | | | | Every city has a handful of dealerships that buy |
| consumers would laugh if they knew how much the | | | | vehicles off of consumers. Carmax is spreading rapidly |
| dealership is actually giving them for their trade. | | | | across the US, plus establish independent dealers such |
| There is "Actual Cash Value" and there is "Trade | | | | as Oklahoma City Used Cars still make cash offers |
| Allowance". Most dealers submit trade allowance for | | | | for vehicles. |
| review when negotiating with customers because not | | | | If a consumer prefers to get a ballpark via the internet |
| getting enough for a trade-in is the most common | | | | versus having to go to an appraisal, they shouldn't |
| reason for someone to walk away from a car deal. | | | | check with car value sites such as Edmunds or Kelley |
| Actual cash value (ACV) is just as it sounds. All things | | | | Blue Book. While these are excellent resources for |
| being equal, if the dealership were to stroke a check | | | | new cars, they are often inflated on their used car |
| for a vehicle without selling one back to the customer, | | | | values. |
| this is the amount that the dealer is putting into the | | | | Consumers should find out what vehicles similar to |
| vehicle. It is often the same as replacement value | | | | theirs are actually selling for. Used car sites such as |
| (how much it would cost to pick up a similar vehicle | | | | Memphis Used Cars have databases. Whatever |
| wholesale or at an auction) but not always. There are | | | | dealers are selling theirs for, deduct $2,000-$4,000 for |
| other factors, but for this article, just the basics. | | | | vehicles under $30,000 to get a ballpark of what |
| Trade allowance is ACV plus profit reduction from the | | | | dealerships are actually putting into vehicles. |
| cost of the vehicle the auto dealer is selling. They | | | | Use this information when negotiating. Many sites and |
| aren't "giving" that much for the trade-in, but they are | | | | articles recommend holding the trade in information as |
| "showing" that much in the trade-in. | | | | a secret until later in the deal. This is pointless, wastes |
| For example, let's say the dealership is has an asking | | | | time, and is counterproductive to getting the best deal. |
| price of $20,000 on a GMC 1500. This dealership | | | | It may make the numbers more accurate, since a |
| actually owns the truck for $17,500. They place an | | | | dealership will be more inclined to offer their true best |
| ACV of $9,000 on the trade in. | | | | price on a vehicle if there is no trade to account for, |
| After some back and forth negotiating, they offer | | | | but it won't help save money. Once the trade is |
| $10,000 for the trade and take $500 off of theirs. That | | | | presented, the numbers on it will simply be lower than if |
| would be $19,500 minus $10,000 for a trade difference | | | | it was presented originally. In fact, the wasting of time |
| of $9,500. The consumer may like this deal. | | | | and displaying dishonesty in the negotiations can |
| In reality, they are still only putting $9,000 in the trade | | | | actually hurt the value. |
| and taking $1,500 off of theirs, yielding a profit of | | | | Be upfront, but have the knowledge of the trade-value |
| $1,000. But if they present the numbers as $18,500 for | | | | handy. If you know someone will stroke a check for |
| theirs and $9,000 for the trade, the consumer is more | | | | $10,000 and the dealership with your next vehicle |
| likely to walk away from the deal, even though the | | | | offers $9,500, pull the trade out of the equation, sell |
| trade difference is still the same. | | | | your car, then buy the new one without trading. It's |
| The reason: people want more for their trade than | | | | simple. |
| what the dealership really wants to put into it. By | | | | |