Trading in used car lowers the purchase price of your new car, and at the same time it is an excellent way to get rid of an old car without trouble of getting someone to buy it and hassling over the price. Also, it is a great deal especially for the car dealerships as they are going to pay you less then you would have gotten by selling the car yourself.
Naturally, they are also going to sell your used car for much larger price then they paid you. Very often profit on selling trade-in cars is larger then on selling new cars.
However car trade-in can still be beneficial to you because many states calculate the new car tax in a way to reduce the sales tax for the new car by subtracting the traded-in cars value. Unfortunately, not every state does this and you must check if this applies in your case, just ask your car dealership, they will know all about it.
Selling car back to the dealer is another way to profit from trading-in your car if you do not want to sell it yourself. For example if you drive a Ford and want to buy Nissan, you should sell your Ford to Ford dealership. You will probably get more for your car this way because it is usually worth more to Ford then it is to Nissan dealership.
If you want to find out what is the market price of your car, all you need to do is go and ask your car insurance company. Each insurance has so called Kelly Blue Book in which each cars value is stated based on a cars year and model.
Another good way to check for possible price of your old car is to search online and check for the prices of the similar models. While you are at it compare mileage as well as the prices. Be sure to have all this info before you decide on a trade in.
One small detail in trade-in, is cleanliness of your used car. Make sure to clean the car thoroughly both inside and out before going to the dealership. Also, remove all your personal things. Professional cleaning job can often increase your cars value so you can look at it as a kind of investment.
Clean cars often get offers higher for several hundred bucks then the messy cars. Remember that the dealers are just humans, they are like you and me and if they like what they see, chance is you will get better price.
So should you trade-in your old car?
No - If you have some experience in car selling and expect to get a better price selling it yourself.
No - If you are not in a hurry and can spend several weeks and possibly months selling your car.
OR...
Yes - If you do not have much time to waste.
Yes - If you want to avoid car-selling hassle (yes, you as a seller can also be hassled).
Yes - If your primary goal is to get rid of your old car and the price you will get for it only comes second.
At the end the choice is yours, but whatever you do not forget to bargain and try to get a better deal, no matter which way you choose to go.
Getting residual values This will take a little homework and shoe leather. 1.Identify several cars having similar features that can be leased for similar monthly payments. 2.Note and write down the residual value of the cars. 3.If you're not married to a brand name (most cars today have similar high quality) then if features are similar, go with the car having the highest residual value
The Internet may not be the best place to try to get this information. Surveys show that 60% of people looking to buy or lease a car do some searching on the Internet. This has made the manufacturers less willing to disclose residual values. In fact, some of the Big Three (GM, Ford, Chrysler) will not print them in a quotation from the dealer.
Residual values risks
These values are at best educated guesses Residual value amounts are made by companies (or the car's manufacturer) as to what the car will be worth after a certain number of years. It is not a value you can take to the bank. The manufacturer might even inflate the value in order to increase the sale of leased cars, where by increasing the residual value the monthly lease payment is decreased a little bit and may be more completive vis-?-vis another make of car.
Check popular publications If you sense from popular publications (newspapers, car magazines, etc) that the car is not selling very well and that there is a big push to get rid of inventory, then assume that the residual value might in fact be as much as 10% less than the actual value ought to be.
Other risks in residual value accuracy This risk is present matter what two cars you select for comparison. Between now and, for example, three years from now, a competitive model might pop up that makes your current prospect a real dog by comparison, thereby decreasing its residual value. But that is true about any current model. So don't worry about that, as you are only trying to compare two residual values knowing that both are in danger of being similarly different in the next three (or 4, or 5 or 6) years.
Residual values from the Internet Although the Internet is jammed with card sites offering residual values, they are mostly approximations. The largest automotive database I know of ($50,000 annual license fee to use) offers residual values for each of four different geographical areas of the United States. In the Northeast U.S. it offers one set of values for the western half of a State and a different set for the eastern half.
Therefore the only reliable value is the one you get from a local dealer. All the rest are really an average. Manufacturers are uniform in not giving out residual values to third parties, so one has to wonder where the Internet sources get them.
Decide on term of ownership Before asking for the residual value of the lease, decide on how long you plan on owning the car. Leases are offered for up to five years, or 60 months. Just be sure to get a residual value for the number of years you plan on owning the car.
By Federal law all pertinent financial data must be provided before signing a contract. Ask any salesperson for a lease offer, and insist on the residual value. He may give it to you only verbally, since every effort is being made to hide this from you. Insist on it, and they will deliver the value. Say Thank You and move on
If you get a hard time from the dealer or his salesperson, here is the law you can quote
Note: For the sake of brevity, much of the material has been omitted as not relevant to residual values, but may be seen in whole om the Internet searching for Regulation M, then look for sub paragraphs as follows:
Regulation M Consumer Leasing Sec. 213.4 Content of disclosures For any consumer lease subject to this part, the lessor shall disclose the following information, as applicable:
4) Residual value. The residual value, with a description such as the value of the vehicle at the end of the lease used in calculating your base [periodic] payment This means you have legal right to the residual value, under Federal Regulation M
Financial gain For any two vehicles, whether a Sedan, Van, SUV, or light truck, costing about $25,000, it is not unusual for the trade-in value after three years to differ by up to $3,000. This is money that stays in your pocket. So the effort to do this fact finding before buying the car is handsomely rewarded.
Financing terms The interest rate that determines the monthly payment is immaterial. All that is to be compared are two cars for which the monthly payment is essentially identical, and then develop an estimate of what each might be worth in x number of years. It's essentially money-in vs. money-out. If you pay the same monthly payment for car A as for car B, will car A cost $3,000 more to trade it in for the new model A than if you had bought car B?
Copyright 2006 by Beacon Data LLC All rights reserved
Both Nikola Govorko & Ralph M are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Nikola Govorko has sinced written about articles on various topics from Mobile Phone Reviews, Chapter 7 Bankruptcy and Bankruptcy Law. www.Driver-To-Driver.com is site dedicated to cars, with advice form drivers to drivers.Visit us and learn how to buy a car online, get a. Nikola Govorko's top article generates over 201000 views. to your Favourites.
Ralph M has sinced written about articles on various topics from Cars, BMW. Ralph is an author of automotive articles for people who want to save money when leasing or buying their next car.Visit his web site at