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How to save time and money on your trade-in - July 18, 2009
Here are some dos and don'ts when preparing to part with your family vehicle
Trading in your vehicle? Here are some dos and don'ts.
When you visit a new-car dealership with the intention of buying a car, one of the first questions a salesperson will ask is whether you have a trade-in.
Before you arrive at the dealership, however, there are some things you should know about trade-ins, which could save you time and money.
The most important issue with a trade-in is the value of the vehicle in question.
Understandably, car owners want the best price for their trades and dealerships know they have to pay a fair price (but not retail price).
The reason dealers can't pay retail value is because they invest money and resources in preparing a trade-in for resale on their lots.
These costs cover such things as reconditioning, warranty, sales rep commissions and advertising. For this, dealerships need to turn a profit.
If you want the highest value for your trade-in, you're best to sell it privately.
This can be an arduous task that involves paying for the advertisements, meeting with potential buyers, negotiating a selling price and arranging for payment. It's not for everyone.
There are three main advantages in trading in a vehicle to an authorized new-car dealership, as opposed to selling it privately.
First, it's quick and hassle-free. Here, you simply get the vehicle appraised and hand it over when it's time to pick up your new wheels.
Second, the tax savings can be significant (hundreds or even thousands of dollars).
The amount of money you get for your trade-in is automatically deducted from the cost of the vehicle you're buying. So, you pay tax only on the difference between the cost of the new car and value of the trade.
Third, you don't have to spend time and money preparing the vehicle for sale and trying to find a buyer.
As mentioned, this can be a lengthy and frustrating experience, especially if you aren't used to strangers calling or visiting your home. Potential buyers often turn into no-shows.
And should you decide to sell privately, always insist on a certified cheque.
For those who plan on trading in their vehicles to a dealership, here are some tips to help you get prepared.
Check classified ad listings and specialty publications to find out the approximate retail value of your make and model. Note that the asking price is never the selling price.
Enhance curb appeal by giving your vehicle a thorough cleaning (inside and out) before having it appraised by a dealership. If possible, certify your vehicle to increase the selling price.
Declare any outstanding liens or loans on the vehicle before offering it to a dealership.
Provide the service history of your vehicle and any mechanical or structural issues that may affect its value. Dealers have to disclose this to the next buyer; if damage is not disclosed, expect the dealer to look to you for compensation!
Don't hide any information about your vehicle. This is unethical and is sure to reflect unfavourably on you as a customer. Again, you may be expected to pay for any undisclosed damage.
Don't alter any equipment or features on your trade-in after it has been appraised. I've seen situations where customers have removed stereo equipment and premium tires – after their cars had been appraised with those items included. This complicates and lengthens the car-buying process, and it introduces an element of distrust into the process.
Imagine how you'd react if the dealer removed items from your new car prior to delivery.
Don'tbe unrealistic about the appraisal of your trade-in. It's important to understand that the retail value and the appraised value of your vehicle will be different – sometimes to the tune of thousands of dollars.
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