One important aspect when shopping for a new or pre-owned vehicle is the value of your trade in vehicle. Today, let’s talk a little about what happens when you take a vehicle into a dealer to get your trade-in appraised.
Generally speaking, you want to negotiate the price of the vehicle you are looking to buy prior to allowing a dealer to even know anything about your trade-in. Sales people at dealerships are trained to get the keys to your trade prior to taking you on a test drive so that their used car manager can be appraising your trade while you are falling in love with their vehicle. They like to make it seem as though they are getting two things done at once to cut down on the amount of time it takes you to complete the purchase, but that is not the real reason for this process.
The real reason is that while you are test driving their vehicle then the salesperson is getting details and asking you questions about your trade in. He asks things like how much you owe on the trade, how much you think your car is worth, and what amount will it take to get this deal done today.
When you answer the salespersons questions you are arming him with valuable information.
When you arrive back to the dealer’s lot after the test drive, the salesperson goes to get your keys from the used car manager and it is at that point he fills the used car manager in on exactly what it will take to complete the deal.
So let’s say you have told the salesperson that you need $10,000 for your trade-in and the black book used car guide states your trade in is worth $8,000, which in no way means that a deal can’t be put together for you. All that means is that they have $2,000 less negotiating room on the price of the vehicle that you are looking to purchase. The salesperson will come back to you and give you the trade in allowance (the amount that you have already told him you wanted to hear) and you will never know the true ACV (Actual Cash Value) of your trade-in.
The more efficient way to handle this is to not even discuss a trade-in until after you have negotiated the price down on the dealer’s vehicle. This will give the dealer less of an opportunity to make additional profit on your purchase.
A lot of people refer to this process as flipping the numbers. Most consumers know that it happens but do not really know how to prevent it from happening.
Consumers these days turn to the internet to obtain values on their trade-ins but the reality is that the dealer is the one who has access to the true value of your trade-in. No dealer will pay you more for a car than he would pay if he went down to the auction to buy a similar vehicle.
So if you are out car shopping and one dealer tells you a trade-in figure several thousand dollars different than other dealers, rest assured he is flipping the numbers. In the end you will need to look at the bottom line (the amount financed) to determine if your purchase is a good deal. It doesn’t hurt to get the information that the internet offers you regarding the value of your trade in but the true test is when a dealer offers you a fair trade in amount after you have already agreed on a price for the car you are trying to buy.
Contact MAC today to learn more about the car buying process.
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