Used car prices have largely followed rising inflation of other goods over the past 18 months, with the average used car price being 40% higher than a year ago, according to second pilot, a vehicle shopping platform that monitors car prices.
While data from the auto industry indicates that used car prices may level off, car buyers still have a lot of leverage when negotiating the price of their trade-in vehicle.
If, that is, they understand how to negotiate against a tough and experienced opponent – a car dealer.
“It’s common for dealers to make low bids in anticipation of a counteroffer,” said Tim Davidson, president of Car Title Loan Lenders, in Fountain View, Cal. “However, never accept less for your trade than what a trusted industry guide estimates its value.”
It is up to the buyer to ensure that the dealer does not increase the price of the new vehicle to compensate for agreeing to a decent trade-in value. “This is a common strategy used by dealers who monitor their own profits,” noted Davidson.
How to Negotiate Your Best Auto Trade-In Price
To ensure you maximize your vehicle’s trade-in price, take these tips to the dealer before signing on the dotted line.
Know the value of your vehicle
Before going to the dealer, go online and find out the typical trade-in price of your car.
“When it comes time to negotiate with the dealer, you’ll know if their offer is fair or not,” said Adam Wood, co-founder of Revenue Geeks, a consumer financial pricing platform. “There are several reliable websites where you can find this information. You can watch Edmunds, Kelley Blue Book and Canadian Black Book.”
“Because every car is unique, the trade-in value suggested by these sources should only be used as a basic guideline,” Wood noted.
Bring the “vouchers”
Another “must do” before entering the dealership – make a counter offer.
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According to Samuel Lewis, founder of SJL Financial, in Wilmington, Del., never go to the dealership without two key items: a trade-in/sale offer from We Buy Any Car and/or Carmax, and approved financing for the new car you’re buying.
“Wait for the dealer to make you the trade-in offer first, then show him your counter offer,” Lewis said.
Selling instead of trading
You may be tempted to trade in your old car for a new one, thinking this is less of a problem and even saves you time.
“Unless you’re dealing with a reputable dealer, however, you always run the risk of undervaluing the value of your old car, resulting in a deal costing you more than it should,” said Lanny Tuchmayer, director of operations at Bergel Law. , in Toronto, Canada. “Even newer dealers can be problematic. They would “agree” on the value you want to trade in your old car for, but then take the difference while trying to sell you the new car.
If you are not aware of the market costs, those costs can take the form of an exorbitant dealer fee, an extra warranty or even a higher price tag for the new vehicle.
“If you can’t find a reliable local dealer, it’s a better idea to sell your old car first,” Tuchmayer said. “You can get more value out of your car this way than with trade-in.”
take back
A big mistake car buyers make is entering into negotiations for a new vehicle by telling the seller that a trade-in is part of the deal.
“The seller will then offer a deal that pays a lot for the trade-in,” said Melanie Musson, an auto expert at AutoInsurance.org. “But the car dealer won’t tell you that they charge more for the car you’re interested in to make up for what they’re paying you for your old car.”
“Negotiate a sale price for your new vehicle first, then discuss the trade-in option and what they would give you for your old car,” Musson advised.
Selling your car is up to you
The good news? individuals those looking to trade in their old car for a new one now have more bargaining power than ever before.
“That doesn’t mean they can just throw out a number and expect to get it for their profession,” Musson said. “It is up to the consumer to do research to know what their car is worth as a trade-in vehicle and to stand up for it.”
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