10 useful tips on trading in your vehicle
Sandy Liguori - Tada President 2011-2012
Nov 09, 2011
When car owners are in the market to buy a new vehicle, they usually want to sell their existing vehicle.
They can sell it privately, which requires some legwork, patience and risk, or they can trade it in to a new car dealership. A trade-in refers to any vehicle that a car buyer intends to sell to the dealership as part of a deal in acquiring another vehicle (new or used).
The benefits of a trade-in (as opposed to selling privately) are the efficiency and convenience of buying and selling at one location, where you may already have a relationship, and significant tax savings.
The actual sales process and completing a purchase can be handled quickly — even within a couple of days. Many busy consumers like the idea of dropping off their older vehicle and choosing a new car at the same place.
The other benefit is the tax savings. The value of a trade-in is deducted from the selling price of the car you’re buying. This reduces the taxable portion that must be paid on the new vehicle.
Let’s say you want to buy a new car worth $40,000, and your trade-in is appraised at $20,000. That $20,000 is applied toward the price of the new car, effectively reducing the selling price to $20,000.
In this case, the customer would pay tax on $20,000 ($2,600), as opposed to $40,000 ($5,200), a savings of $2,600.
Another consideration when trading in a vehicle is price. Here are 10 useful tips to ensure that you get top dollar for your trade-in.
Understand that a dealer will pay top dollar on a wholesale level, but not on a retail level. That’s because there are costs incurred by the dealer on all trades, such as vehicle inspections, reconditioning, advertising and sales commissions.
Study the market. Used vehicle websites will give you a fair approximation of the value of your car. Canadian Black Book (canadianblackbook.com) is considered the industry benchmark for providing market values for cars, trucks and SUVs on the wholesale level.
Be realistic. Optimal prices are based on vehicles in immaculate condition, and few vehicles meet that standard. Knowing the true market value of your vehicle will give you leverage when negotiating.
Make the car presentable. Vacuum the floors and trunk, and remove any dirt and debris from interior surfaces, including the dashboard, seats and door panels. Fix obvious damages, such as a cracked windshield, worn out tires or broken headlights. Repair any dents and dings in the car’s exterior.
Gather all service records. If you can prove that you have taken care of your vehicle with recommended service maintenance, it will command a higher price (either at a dealership or privately).
Be honest about the car’s true condition. It doesn’t pay to lie or mislead the buyer; the truth about the car will be revealed in time. Dealers use the CarProof services to verify a vehicle’s history.
Don’t remove or replace any parts or accessories after your car has been appraised. To do this is unethical and just plain wrong.
Determine the current market demand for your make and model, and whether the dealership is overstocked for that model. Supply and demand and market conditions will affect how much a dealership is willing to pay.
If you are driving an older model vehicle that is on its last legs, find out if there are any “clunker” programs offered by the manufacturer. Sometimes a manufacturer will offer a minimum trade-in allowance (approx. $3,000) on these older vehicles.
Remove any personal items before delivering the vehicle to the dealership. Check the glove compartment, underneath seats and in trunks.
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