Knowing when to sell your car and how to trade in your car might not be as obvious as you think.
One of the biggest decisions a new-car buyer is presented with is whether or not to trade their current model in at the dealership to knock some dollars off their purchase, or sell what they’ve got privately and simply put the cash made during the private sale towards the new car.
Sure, you may get a decent trade-in value from a car dealer who’s more than happy to do you a deal to earn commission, but is it possible you’re better off skipping finding out your trade in value and just selling it on the open market, using that cash as leverage to work up a bargain with the dealer?
The thing that makes the decision so difficult, of course, is the fact that the resale value – what you’ll get selling a vehicle privately – and the vehicle trade-in value – versus what you’ll get from a dealer who’s trying to put you inside a new car – are likely to be very different.
A fair amount of effort is required for a private sale, however, since you’ll need to prepare your vehicle, advertise it, organise to have it inspected and test driven, as well as be ready to meet an onslaught of people who like to haggle for sport.
If that all sounds like too much work – and it is a lot of work – the simple, easy option of taking your car to a dealer for a trade-in will seem far more appealing, even if you don’t get as much money going that route.
If neither the thrill of the private sale nor the comfort of the trade-in appeal, there’s always the option to sell your vehicle to a used-car dealer, which is almost like a middle ground between the first two options.
How to deal with the dealer, and what is the trade-in value of my car?
It’s always worth taking your car in to a car dealership to see what it will fetch for a trade-in – who knows, you may be pleasantly surprised at the outcome, especially if you’ve brought your vehicle in looking its absolute best.
As with all negotiations, the first offer from the dealer is far from final, and there’s always wiggle room for that number to bounce around a bit. Remember: they want your business, so twisting their arm as far as it can go in an effort to secure the best deal possible is in your interests.
A good rule of thumb is to anticipate that the dealer is likely to offer you anywhere up to 30 per cent less than what they think they can sell the car for at a later date, which will help you figure out what your car’s real value is should you decide to sell privately or go to a place that specialises in used cars.
An independent evaluation of the trade-in value of your car can also be a good idea before you approach a dealer, helping you to settle on a realistic asking price for your vehicle prior to your visit.
As important as your trade-in offer figure is, there are other things to be aware of, like the changeover price – the amount you’re going to have to pay for your new car once the trade-in value of your car is deducted.
One way to think of it is like this: if you think your Mazda CX-5 trade-in value is worth $15,000 and the new car you want to buy is listed at $30,000, and you’re offered $12,000 trade-in by the dealer, it’s possible you’ll feel like you’re being hard done by.
Not necessarily so: the dealer may make the changeover price $14,000 – rather than $16,000 – essentially meeting you in the middle by discounting the brand-new car instead.
It comes down to the residual value of your car, i.e. what price the dealer thinks they can sell your car for down the track. If the residual value is higher, you may get more for your trade-in; if the residual value is on the lower side, you naturally won’t get as much for the car.
This is where the dealer may step in and knock some money off the new car, so you feel like you’re still getting a bargain and aren’t coming off second-best in terms of the car trade-in price.
If you’re still wondering ‘how much is my car worth?’ after all that, keep in mind that the newer and more well-maintained your car is, the higher the vehicle value. The lower the kilometres on the odometer the better, too, of course.
Now you’re fully armed with information, good luck in getting the best price possible for your soon-to-be ex-car.
By Stephen Corby
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