What is the real deal with trade ins?

[Stock Ain't Fun]

My dad was in the repair end of the car business for his working life. Dealerships make their money when you bring a car in for service. Most sales people are paid by commissions, so that's why they gouge you. While not everyone can do this, it benefits you to use a company sponsored program or a military discount program to buy a car. I used GM's Military Discount program; I ordered my car direct from the factory for a non-negotiable price, meaning the dealer could not modify what I was paying for the car. I saved about $3k. I got close to what I was asking for my trade. I was one of the fortunate ones, I realize that. Hang in there, hold your ground and you will prevail.

[Joe M 2012 2SS]

If your going to trade in, speak with salesperson at the end of the month, most dealerships have monthly quotas they are trying to achieve and will be flexible then.

I traded a 2010 F150 supercab 4x4 in on my Camaro, they initially offered 18k, KBB was 20600.
I told them I would like to have the Camaro, but I didn't need it, as there was nothing wrong with my truck, and if I couldn't at least get what it was worth based on KBB trade in, I could sell it myself and get 1000 more than what KBB trade in was, they gave me 20600.

I wouldn't negotiate the trade in and the vehicle being purchased together, just because they give you a good value for trade in, they may overprice the vehicle your interested in.

[TheHorse13]

OP, consider this.

If you sell your car to a place like Carmax, there are taxes involved. Depending upon your state, the rate will vary. As you can guess, taxes on a 25k car can be steep ($1,500 or more) so you need to calculate this into what is acceptable for your trade in. If you trade your car in as part of your purchase from a dealer, you escape this tax.

The dealer uses black book/wholesale auction pricing when making a trade. Most sites on the web that offer this data are dealer members only. That said, there are ways to search for your vehicle and get the same info. There are a few Google searches that will get you the data without being a member.

[Ragnar]

When I sold car cars at a couple of different dealerships, I made way more money, with less effort, selling used cars than new cars. Buy a new car toward the end of the month and you will usually get your best deal. I liked it when the used car manager would put a number on the trade and then the new car manager, under pressure to deliver a new unit, would put a bigger number on the trade. Used car manager with the red face, would get pissed off, that he now owns the car in his inventory at a higher cost.

For the salesperson, yea I made $75, but I had a unit count that allowed me to make bonus money!

[Sir Nuke]

well I don't know for sure someone mentioned this or not yet, but I have a little experience in this arena that I just learned about Chevy/GM. First the trade-in question..... you can go to Edmonds or Kelly and get what they say what you should be getting for you car as a trade-in, yet as you found out they don't or won't get you that much. and here is the reason why. There is yet another data base that they use in combination to the NADA and stuff like Kelly's/Edmunds.....and its what cars in your area are selling for at wholesaler actions. for if you car may sit on their lot, or any car that they take in trade.....the dealer considers selling to a wholesaler thus although they still make money, its a quicker flip for them.

NOW there is TWO other things that you need to know/consider that actually puts money in YOUR pocket.
1. This works for you IF you are a member of a CREDIT UNION. Chevy/GM has a program that will give you the same price for a new car that give you the "SUPPLIERS PRICE" which is the same price as a GM employee. I just bought a new Vette and that discount alone saved me $7000 off of the MSRP. AND that CAN be combined with you GM CREDIT, I know, I used it.
2. Another thing to keep in mind, the price of you trade in.....when you trade in a car, whatever the difference is between the price of the NEW car vs. the trade-in.....the taxes that you pay for the new car come right off the top. Example: lets say you are going to buy a new SS, and its $39500......your trade-in is $18000. If you didn't put done any other funds you would only Taxes on $21500. in my next of the woods that would be a difference of $1123 that you wouldn't pay in taxes. So that would be the same thing as you bringing $19,123 CASH to the table when you buy the new ride if you were bring CASH as the down payment, as you would have to pay ALL of the taxes.

[MBS]

It didn't help any of us Camaro owners when GM offered 20% off .

[PatsRS]

Originally Posted by Red2014SS

The dealer has to pay taxes on a huge business, has to write checks to a lot of employees, has to maintain millions of dollars of inventory, has to pay a huge electric and phone bill, etc..

The guy down the street does not...

That's why the dealer has to low ball you.

And the dealers overhead is my problem now?

[el ess A]

Originally Posted by PatsRS

And the dealers overhead is my problem now?

Not really, but it's the dealer's overhead, so the dealer will ensure the deal works in THEIR favor 99.99999 percent of the time to make enough money to cover that overhead. A friend of mine who used to work at a large dealership said sometimes if it's a sales number they want to hit, they may absorb a tiny bit of a loss on one car, but make it up on average somewhere else. Many won't or can't due to size limitations, but some will. In the end, remember the house always wins.

Their goal in life is to separate the customer from their money to make a profit. That's all that matters. But isn't that the point of business?

[PatsRS]

I did a little more legwork last night and went to NADA and KBB for my Cruze and my Camaro. Keep in mind they all give you a range.

KBB - Camaro -21.2K - 22.5 K Cruze 8.5K - 9.5K
NADA - Camaro 20.7K - 21.8K Cruze 8.3 -10.2K

Also checked Auto trader they make a site unseen offer based on information input. It can be used as Cash or trade value. 18.5K was their offer.

I realize the tax implications. In NJ it is adding almost $2K in savings. which is also huge.
The question now becomes I'm up to 28K for both tax savings of $1960.00.
I need $25,500 to get out clean on both cars.

The car is MSRP $39500 discounted $2700.00.
Plus 1000.00 loyalty
Plus $250.00
Plus GM card topped off at $3000.

Would you make the deal?

[PatsRS]

Originally Posted by el ess A

Not really, but it's the dealer's overhead, so the dealer will ensure the deal works in THEIR favor 99.99999 percent of the time to make enough money to cover that overhead. A friend of mine who used to work at a large dealership said sometimes if it's a sales number they want to hit, they may absorb a tiny bit of a loss on one car, but make it up on average somewhere else. Many won't or can't due to size limitations, but some will. In the end, remember the house always wins.

Their goal in life is to separate the customer from their money to make a profit. That's all that matters. But isn't that the point of business?

I agree. I don't begrudge anyone their business or their profits. I just think the real process is way different than what they portray when you start searching dealership inventories for a car and they ask if you want to appraise your trade.

[Scrappy Doo]

The bottom line in the deal is all that matters. I wouldn't get hung up on a trade amount if the price of the new one is right.

According to your prior post, you want 29k for the two and the dealer is at 28k. You aren't too far apart at all.

If you think you can sell them both yourself for more money (and recoup any trade in tax savings) then make it happen.

[el ess A]

I find too many times people fall into the trap of the trade-in as part of the purchase. While it sort of is related, those are TWO SEPARATE transactions. And the dealership knows how to manipulate the numbers by merging the two to add to confusion. They may give you lots of money on trade, but not as much off the new car price, or vice-versa. It's the NET DIFFERENCE you pay that makes the deal. I've actually had a dealer change his selling price once we "settled" on the sales price, then I hit him with a trade-in. He then tried to tell me that the first price was "cash price" and that's why it was different. BS.

Bottom line is, if you don't want the hassle of selling your car yourself, the convenience factor has a price. If trade-in is more important to you, then do the legwork and sell it yourself. Most of the time, I've got the best deal all around by walking in with just me and a checkbook. I RARELY trade in a car.

You don't have to buy a car, and for God's sake don't act like you're in a hurry. So if you don't FEEL like you're getting a fair deal, then you probably aren't. If you feel comfortable paying the price and get a reasonable trade-in value, then everyone is happy and that's a good sale. Even if the dealer gets a couple of hundred extra in their favor.

[PatsRS]

Originally Posted by el ess A

I find too many times people fall into the trap of the trade-in as part of the purchase. While it sort of is related, those are TWO SEPARATE transactions. And the dealership knows how to manipulate the numbers by merging the two to add to confusion. They may give you lots of money on trade, but not as much off the new car price, or vice-versa. It's the NET DIFFERENCE you pay that makes the deal. I've actually had a dealer change his selling price once we "settled" on the sales price, then I hit him with a trade-in. He then tried to tell me that the first price was "cash price" and that's why it was different. BS.

Bottom line is, if you don't want the hassle of selling your car yourself, the convenience factor has a price. If trade-in is more important to you, then do the legwork and sell it yourself. Most of the time, I've got the best deal all around by walking in with just me and a checkbook. I RARELY trade in a car.

You don't have to buy a car, and for God's sake don't act like you're in a hurry. So if you don't FEEL like you're getting a fair deal, then you probably aren't. If you feel comfortable paying the price and get a reasonable trade-in value, then everyone is happy and that's a good sale. Even if the dealer gets a couple of hundred extra in their favor.

I agree with everything you said. Although the extra $4000 in incentives do have an expiration date. if I had the time, in general, I would try and sell it myself. I just can't be bothered. I do think I am getting a good deal and I should be able to get the best financing. I was just annoyed about the whole appraisal system in general.. I think they set you up with and unrealistic expectation.

[yzark99]

As someone who works at a dealership in support, I can tell you that prices have more flexibility than you know. For instance, there is usually a bonus paid to the dealer for moving overstock directly from the manufacturer. There are regional bonuses paid for beating other dealers in sales. There is also "advertising" built in to every new vehicle's price, and this can be discounted also. Some dealers pass these savings on to the customer; others keep it all.

MSRP is a scam. There are at least 3 tiers under that used to figure a price. Also, never buy from a dealer that asks for more than MSRP for rare vehicles. There are dealers that don't do this; and you get the savings. It can be cheaper to fly to another state, and drive your discounted vehicle home.

Always try to buy at the end of the month. The owner sets certain quotas, and those who fail to meet them suffer the consequences. A senior sales director in this area just got fired for this. I have literally seen prices drop thousands in one day when they are starting to sweat.

"Employee Pricing" don't get too excited. There can be thousands under that for wiggle room. I got destination waved on my purchase, for instance. That's $900 right there.

Anyone remember "cash for clunkers?" It managed to crush many older cars that were in perfectly good condition. As a result, your used car just doubled in value. I had a 99 cougar with 115k miles. I figured my dealership would give me $900, and I could maybe get $1500 private. I decided to list it at $2600 on craigslist, so it could be reduced in price to sell. It sold 18 hours after I placed the ad, for $2500 cash.

If you think the salesman is trying to screw you, you are right. Most ARE scumbags. I have seen them smile to a customer's face, then tear them a new one with the other salesbugs as soon as the customer has left (and sometimes when they are still there). They also like to play "good cop, bad cop" between the salesbug and their manager. If you get a bad vibe, walk! I've had to do it, and it's a pain in the ass, but I saved my girlfriend from wasting her time with assholes who were lying to her face.