While this might seem like an old lesson to a lot of folks, we had some sort of awakening couple of weeks back. This was a flyer that lay inside our mail box from the Volkswagen dealer advertising a car trade-in. We thought since our car had already hit the 100K mark and there were impending maintainance issues, we thought this was the perfect time to trade it in. We did a bit of reading before we went in though not all of it made perfect sense.
There are many websites that try to teach you the art of selling your used car. The first and foremost lesson was if you were interested in trade-in, never ever announce that you were there for that purpose. We did exactly what we were warned not to do. We said we were there for a trade-in, test drove another car and said we loved it (we did). Before we knew it, we were in the middle of a deal. Car salesmen are severely aggressive smooth talkers we figured.
Our second mistake- we disclosed our financing situation. In retrospect it seems stupid but we did it anyway. So here is what happened- we told them how much we owed on our old car and how much mortgage we were willing to pay per month. So in essence, we told the dealer we would take any car that would keep us within our monthly budget. After we gave him all this information, the guy came back with an estimate for our old car. That was not enough to pay towards the new one. Then he told us he could add a 'few hundred bucks' if he checked again. In all this time, we did not know what our new car was going to cost us!! Later we would realise the dealer was making a killing on the price of a new car and another killing low-balling us on our old car. The most important lesson in a trade-in we learnt is to never ever leave both the selling and buying price as variables to be determined by the dealer (duh!). To our credit, we refused to sign anything before 'sleeping on it'.
Then the research began which I must say was not too useful in the beginning. We tried to get estimates from the Kelly Blue Book, NADA and Edmunds. The KBB value for our old car was about $2K lower than NADA and Edmunds! Here is what we discovered- when the KBB values are lower for a particular model and location, dealers (obviously) quote the KBB when they are buying from you and use NADA when they sell a used car. The value of a trade-in though is far lower than what you will get if you tried selling your car yourself (private placement).
When we did all this research, we figured we had been had for. We could get a lot more for our car than the offer we had at hand. We called back the dealer and told him we were having a lot of reservations about the price he offered us. At the end of the day the dealer called back and the car was magically worth $1000 more than he had offered us the previous day. He swore he was still in the ball park and he would see if he could put some more value into the car.
Then it dawned on us. That the only way we could have a highest bidder for our old car was if we went used-car-lots-hopping pitching one dealer against the other. Given they are all located next to each other, one geographical location is totally possible in one day. Some sort of virtual auction space had to be created. I am so sorely tempted to carry this out as a project to see how much more value I can end up with.
For the time being, we did the required maintainance and decided not to sell. There was no reason to. Our eight yr old car purrs and looks and feels much much younger than he is.
We learnt some very important trade-in lessons. 1) Sleep over it even if the dealer swears the new car is going to be gone in the next 60 seconds. Its not.
2) Call your bank. Tell them the the specs and ask them for a trade-in value. Our bank informed us the trade-in value was too low. They even looked up and told us our car was probably worth more.
3) Conduct a virtual auction! Go from one dealer to the next and try to put more value in it.
4) Do not discuss your financing options with your dealer till you have ALL the information necessary!
Last but not the least do not take on face value any and every information you find on internet blogs :)
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