American Woman Motorscene
HORSE TRADING YOUR TRADE-IN
by Van Matheny
Getting the customer to accept less than fair value
for her trade-in always has been an important profit
source for many car dealers. Salespeople are
trained to look for opportunities; there's even a
term describing this situation: under allowance. But
nowadays, according to the Statistical Abstract of
the United States, new-car profits are decreasing
every year. As a result, many dealers are
responding with an increased emphasis on the
so-called back half money (profits generated from
financing and trade-in allowance). If
there's more than the usual barrage of slick sales
tactics and misinformation the next time you're car
shopping, don't be surprised. But there are steps
you can take to ensure a fair trade-in allowance if
you're willing to put forth the effort and employ a
wee bit of skullduggery.
Within the car business, taking the time to
educate yourself as to the fair market value of your
trade-in is known as "shopping the trade." There
are several ways to go about it, such as paying a
professional automobile appraiser or going to
public car
auctions. But the
simplest and most
direct route is to
pretend to sell your
car for cash to a
dealer.
If you decided
to use this tactic,
your first step is to
make a few phone
calls to select three
dealers that buy
used cars. You
should have a wide
choice of options
here because
almost all car
dealers are eager to
buy used vehicles
if the price is right.
Therefore, focus on
dealers who market
vehicles around the
same price range
you're planning on
purchasing.
Not that the dealers' offers should vary that much.
It's just best to keep things simple by basing your
comparison on similar market conditions.
Next, visit the reference section at the library to
check your vehicle's wholesale book value. If
you're not sure how to use publications like "The
Kelly Blue Book" or the "N.A.D.A. Guide," the
librarian can help you calculate the add-on option
values for your vehicle. Car dealers use book
values only as a guideline, but you still need to
know this information to intelligently interpret their
offers.
Step three is to give old Betsy a thorough
cleaning. Contrary to what you might have heard,
appearance is important. If a car looks clean, you're
likely to receive a higher appraisal because a clean
appearance suggests that the vehicle has been
well maintained, and to a dealer, that means he
probably won't have to spend as much on
reconditioning.
The final state of preparation is to check the
newspaper's classified section to see what private
parties are asking for your type of vehicle. These
prices will give you a starting point when you're
asked what you want for your car. In addition, if
you see dealer advertising, you maybe able to use
its pricing to gauge the popularity of your vehicle.
Popularity is important because the used-car
market is governed by supply and demand. A
dealer's asking price for the average three- to
four-year-old used car normally ranges between
$2000 to $3000 above wholesale book value.
Therefore, by averaging dealer pricing, any amount
that's significantly above or below this range
(given the same vehicle with like mileage and
equipment) serves as a good indicator of
popularity.
Now that you're prepared, it's time to start
shopping. Once you're at the dealership, the
person you'll need to speak with is the used-car
manager. If possible, try to visit the dealer during
weekday mornings; business is usually slow at this
time and the used-car manager is likely to spend
more time talking with you. When asked what you
want for your car, casually mention that you've
seen them in the paper for X amount, but that
you're flexible. Once the manager makes an offer,
act surprised and counter with a statement like, "Is
that all? The wholesale book value is X." Keep in
mind that a good horse trader never reveals his
best price at the beginning of the negotiations.
Don't just give in; see if you can't get him to raise
his offer. Then, after you have his second offer,
simply say it's unacceptable and move on to the
next dealer. Once you go through this the first time,
it gets a lot easier. And after you've finished with
all three, you'll know your vehicle's wholesale
market value within $100.
Getting your money's worth is easy now that
you know how to do it. Good luck and happy
trading!
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