Old for new, the curse of the car world. Everything goes back to old for new. The consumer and the sales representative looked each other in the eye: the former wanted a $15, 000 trade-in, the latter stiffed a laugh and said the retail price wasn’t even that high! This is currently happening at multiple dealerships around the world.
For example, somewhere in Vermont:
Guest: It only has 34K miles. It’s a convertible
Sales Rep: Absolutely well maintained, but keep in mind that this is January and vermont doesn’t have much demand for convertibles in the middle of January.
Sales Rep: Well, about the snow. Not to mention negative temperatures in double digits.
** The sales representative made several phone calls **
Used car Manager: I don’t want it.
Lewis used Car Manager: I don’t want it
Johnnie Donnie Autos, Manager: Well, maybe I could give you $10,000, but I’m doing you a favor
Snow Mountain Auto & Truck Manager: See if I can’t buy it now, but if you still have it in March, I’ll give you $18,000.
** The sales representative hangs up the phone **
Sales Rep: We got $10,000…
Guest: What? ! You people are liars! I saw some ads on the Internet for $35, 000! Come on, honey, we’re leaving.
Who’s here? Did the sales rep correctly perceive the Vermont-style mid-January convertible as a tough sell, or did he or she not try hard enough? Was Mr. Smith wrong in thinking that his car was worth $35,000? We can tell you that the most likely scenario is that an aggrieved Mr. Smith will go home, photograph his car and pay for advertising on the Internet, in newspapers and magazines; He might have to get up early on a Sunday morning to test drive the car with a complete stranger who might not even be that interested in buying an M. Smith convertible. What does Mr. Smith do when a “stranger” offers to buy a car and offers him a personal check? On the other hand, the sales representative clearly lost a sale, because when M. Smith did sell his car, he certainly wouldn’t go back to that dealership. Worst of all, Mr. Smith will tell his friends and colleagues, which may lead to more lost sales. Again, given that the overall outcome would have unfortunate consequences for both sides, who is right in this case?
I can tell you from experience that convertibles do lose about 10 per cent of their retail value during the winter months in the northern states, while trade-in values lose nearly 15 per cent over the same period. It also picked up 10 percent of the value in spring retail and trade-in value. Therefore, in the above fictional case, Mr Smith appears to be at fault and does not understand the market. But the purpose of this article is not to point fingers. After all, it’s a story.
The emphasis is on the important factors that determine the trade-in value of used cars. Most of these variables are self-explanatory.
So let’s go ahead and list each factor in order of importance. After reading through it, you should have a clearer idea of what really affects the value of a trade-in. This will help you plan ahead for the cars you now own in case you want to trade them in. It will also help you buy a new car today, which would be a good candidate for a trade-in. In the future. Finally, if you are currently buying a new car, it will prepare you to negotiate the value of a trade-in.
The value of your trade-in depends on:
1. How is your car brand performing right now?
When SAAB declared bankruptcy, it lost at least 40% of its normal trade-in value. Jaguar and Volvo are two brands that are currently (like many others) struggling to sell new cars, hurting their resale value. Today, a Trade-in on Saturn is worth next to nothing. It’s simple, if there’s not much demand for the manufacturer’s new car, there’s usually not much demand for the same manufacturer’s old car. Conversely, BMW, Subaru and Hyundai are shedding tears, boosting their resale value and thus their trade-in value.
2. The season.
Of course, if you live in Florida, this season’s impact is less than in Michigan or Canada. Having said that, the net percentage impact of trade-in value based on season is so important that we think it needs to come in second. As we mentioned above, the time of year can increase or decrease the value of a transaction by 10 to 20 percent. AWD cars and trucks trade in for new in the fall, convertibles trade in between August and early February, and pickups typically perform well in the spring because home beautification projects/yard garage basement cleanup work is underway – make a list. March, April, August and September are traditionally golden months for auto sales. Generally, trade-ins get a higher price during these periods, but this varies by region.
3. Physical condition.
The overall appearance of your car needs to look younger or at least older than it actually is. If your car is 10 years old, a little rust and some scratches are understandable, but not if the bumper is missing! Put yourself in other people’s shoes and ask yourself “Would you buy your car?” . Windshields are value killers. If there is a crack in the windshield, no matter how small it is, you must calculate that the price of the new windshield will be deducted from your trade-in price.
4. Color combination.
Maybe you like the blue exterior and the red leather interior, but chances are you’re part of the select group. Any yellow, pink, light blue, bright green, gold, bronze… You know, they’re hard to sell. Beige, gray, and off-white interiors always look dirty and usually require a good cleaning before reselling, so you can expect to deduct the cleaning cost from your trade-in value.
In any given car, a higher percentage of buyers will almost always choose one gearbox over another. Mercedes-benz, for example, offers a standard gearbox on its C-Class series, but more than 90% of buyers opt for an automatic. Well, if you want to trade in a Manual transmission for a Mercedes C-Class, you’ll find it’s worth significantly less than an equivalent car with an automatic transmission. This can also work the other way around. The Subaru Impreza WRX appeals to users of manual transmissions, which can be traded in at a higher price.
6. Popularity in its market segment.
By segment, we mean, for example, full-size sedans, middlemen, full-size suVs, full-size pickups, etc. You can think of segmentation as categories. In every segment, there are some cars that sell well and some that don’t. In the middle market, Toyota Camry and Honda Accord are the leaders, while Chevrolet Malibu and Kia Magentis sell less than half as many cars as the leaders (2011 figures). That means that even if you pay the same price for a Kia Magentis as you pay for a Honda Accord, the trade-in value of the Kia will still be reduced despite the same mileage and model year.
7. The equipment.
The pricing gap between a fully loaded model and the same model with basic equipment tends to narrow over time. So even if you put in $5,000 worth of options, the four-year pricing difference between each model is likely to be $1,500. Because of this, it’s much easier to sell a used car with lots of options and features than a basic model. Features like air conditioning, CD player, automatic Windows and locks, and alloy wheels are almost necessities, while sunroof, leather seats, xenon lights, AWD (when the model also comes with FWD), 7-passenger option on SUVs, two-zone climate, etc., always add to the trade-in value of your car.
8. Today’s retail price.
The past few years have been very difficult for manufacturers and distributors. Car companies have begun offering generous incentives and rebates for new cars. That wasn’t necessarily the case three or four years ago. So it’s quite possible that you bought a new car three years ago, when it just came out and paid the full retail price, and today that same car has a $5,000 manufacturer’s rebate deducted from its starting price. It is understandable to assume that your car follows the standard 3-year depreciation, but unfortunately you must now also consider the rebate on the new car and add that amount to normal depreciation.
9. Offer apRs for used cars.
If you trade in your old car at a new car dealership that represents a brand that offers competitive used car prices, this will have a positive impact on your trade-in value. The reality today is that manufacturers offer very low annual interest rates to customers with good credit for buying new cars. Sometimes the difference between a new $22,000 car with an annual interest rate of 1.9 percent and a used $15,000 car with an annual interest rate of 6.9 percent isn’t enough to justify buying a used car. If used cars have a higher APR, they are harder to sell, so your trade-in value is negatively affected.
10. Model changes or production cessation.
Every time you trade in a model or a model that no longer exists, your trade-in value goes down. Every four years or so, companies overhaul their car ranges, and the new generation usually has more luxury goods, more powerful engines, better fuel efficiency and a completely different look. If your car is last generation, your trade-in value will be affected. The same applies if the manufacturer no longer makes that particular model. Conversely, owning a 2006 car, for example, that looks the same as a 2011 car because the manufacturer hasn’t updated the vehicle, will help you get the deal price you want.
There is a used car Dealership.
We discussed this topic in whether you can negotiate the price of a new car. Ot dealers with used cars are likely to keep the trade-in price and make sure they sell it for a profit. The profit becomes your bargaining room for the trade-in value. In other words, you can persuade the dealer to reduce the profit on the used car (that is, offer more money for your trade-in) in exchange for buying a new car there. If the dealer doesn’t have a used car lot, then your sales representative will have to call an independent used car dealer in your area and ask how much they’re willing to pay for a trade-in. In this case, only the items listed in points 1 through 10 will be a factor and your trade-in is unlikely to exceed the market value.
12. The dealer’s representative trades in the same manufacturer as you.
We’ve talked about this a lot on our website. In short, if you trade in a used Honda at a Honda dealership for a new one, you may get more for your trade-in; Especially if you bought a Honda at that particular dealership. The important thing to remember here is that you can trade in Honda for any other manufacturer, and as long as your trade-in is made by the same company as the new car you hope to buy, you have a better chance of seeing the value of your trade-in increase.
With this information in mind, we want you to get the best value for your trade-in now or in the future. If you are buying a new car now, try to think ahead about when you will be making the sale. If you’re hesitant to buy leather seats because they’re too expensive, remember that they can easily add at least $500 in trade-in value and $1,000 in resale value to your vehicle. The same goes for colors and all the other things listed above.
On the other hand, “uncommon” cars at dealerships are often marked down. These are new cars that haven’t been sold for months or even years because they have unusual features or colors. I used to work for a dealer whose mustard models often retailed for over 40K. We owned the car for 17 months and finally sold it for $35, 000. While the customer does get a lot and is one of the few people who like this particular color, that person must realize that their trade-in value is significantly reduced when the car is traded in for a new one.
Also keep in mind that over time, the factors listed above start to become less relevant. This list applies to you if your trade-in is less than 6 years old. If you’ve been trading in for more than six years (a year or so, depending on the model), this list becomes less relevant.