Buying a new or used car is an exciting time in anyone’s life. Except for one thing – the process is often a nightmare. Even if you do the proper research, call around for quotes, and adequately prepare for battle. The results are seldom what most expect, especially if you’re trading in a car with problems. Maybe your trade has a bad CarFax. Or perhaps it suffers from mechanical issues or has a decent amount of body damage. How do you trade in a car with problems without losing out to the buyer? You’ve come to the right place. Because in this article, we’re going to cover how to squeeze every last cent out of a dealer. Ensuring you get the absolute most for your troubled trade.
First, we’ll go over the basics involved in trading in a car. Then, how to properly prepare your trade, as well as to review the things that reduce its value. Next, we’ll cover the top trick used by dealers to make you second guess its worth. Lastly, we’ll share a few of the top tips for negotiating a better deal.
The Basics – How the Trade-in Process Works
For many first-time shoppers, the process itself is a mystery. Regardless of whether your trading in a car with known problems. For this reason, we’ll explain the basics of how it works.
Let’s say you’ve found a vehicle with an asking price of $10,000. If you don’t have a loan on your current car, whatever the offer is will go towards that amount. So, if you get $3,000 for your trade, $10,000 (asking price) – $3,000 (trade offer) = $7,000. If you have a loan on your current car, that needs to get paid. Using the above example, let’s say you owe $1,500. $10,000 (asking price) – $3,000 (trade offer) + $1,500 (loan amount) = $8,500.
What if the amount you owe is more than the offer you get? Dealers call this being Upside Down. We will cover this later in the article.
It’s that simple. Know also, that there’s usually between $200-$500 in fees to pay as well (not including any state sales tax of about 10%). These include a documentation fee set by the dealer and a loan payoff fee.
How to Prepare a Car for Trade-in
The first step is to prepare your car for trade. The trick is to give the dealer as little ammunition as possible. Let’s review:
- Prepare your Documentation
While you won’t lose out on money for not having your paperwork prepared, it can delay the process. Which may cost you the vehicle you’ve found. Perhaps the most important thing is to make sure the title’s in your name, this is what gives you authority to trade it in. If it is not in your name, this is a problem. You can solve this by visiting the nearest DMV office. Bring with you the original Bill of Sale, fill out the required documents, and pay a fee. If you’re missing the title, the DMV will assist with this as well.
- Give it a Wash
As stated above, you want to give the dealer the least amount of ammo as possible. The easiest way to do this is to wash your trade. Including an interior detail. Whether you choose to take it to a pro or detail it yourself, the results are sure to make a difference. The average cost of an expert detail is around $125. If you’re willing to put in the time, you can save a few bucks by doing it yourself. An exterior automotive soap, a bottle of spray wax, and some interior wipes are all available for under $50. For a few useful tips on how to properly perform a detail, check out this article here.
- Determine if You’re Upside Down
Earlier, we mentioned the term “Upside Down,” which refers to owing more on a trade than its value. To get an idea of if you are or not, you should call your bank and request the payoff amount. Next, head to NADA or KBB for a range on your trades worth by entering the year, make, model, model package, and any extras. Once you’ve done this, their system will display a set of values. One of those values is an estimated trade amount. While this doesn’t guarantee you’ll receive what you see, it does help determine if you’re Upside Down or not. The reason it’s helpful to know this is because dealers use this to make lower offers. As well as to make you second guess the possibility of finalizing the sale, which allows them to play the hero role easier.
- Fix Small Issues
Trading in a car with problems is often a pain. You can combat this by fixing small issues yourself. Dealers make a habit of deducting $300 to $500 for almost anything. Things like dings, dents, scratches, missing or broken trim pieces, cracked windows, tears in the upholstery. All of these are simple fixes that cost little to repair. However, if your trade is junk, it may not be worth your time, this mostly applies to vehicles that would otherwise be in great shape. The same goes for trading in a car with mechanical problems. If your engine light is on, it’s always a good idea to take it to a mechanic to find out why. If it’s something as simple as a loose gas cap, or if your trade needs an oil change, you gain a lot of power by clearing the engine light.
Things that Lower your Trades Value
Dealers use anything they can to devalue a trade with known issues. Let’s review a few of the most common:
- Mechanical Problems
Dealers are cautious when it comes to taking in trades with mechanical problems. Why? Because they don’t want to risk having to pay a large shop bill out of their profit margins. To protect themselves, they often deduct a sizable amount from your trades value. The best way to combat this is to take your vehicle to a trusted mechanic for an inspection. If an issue gets found, be sure to have them provide a quote. You can use this if with a dealer to ensure you aren’t low-balled. If you’re trading in a diesel truck with engine problems, be extra cautious. Why? Because diesel technicians are expensive, which leads to high repair costs.
- Body Damage
Similar to trading in a car with mechanical issues, body damage is one of the main things that lowers its value. Even small dings, dents, or scratches may lead to a quick $500 deduction. Why so much? Because if the actual cost is only $50, many will still choose to accept the offer due to convenience. If you have the time and are willing to take your car to an auto body shop, it’s always a good idea to at least get a quote, especially for more extensive damage. Again, if your car is junk, it’s likely not worth the time and effort.
- Accident/Salvaged Title
Here’s where things get tricky. Dealers are very cautious when taking in vehicles that have an accident on their CarFax report. The reason is due to the added risk. Not only are hidden problems more common, but shoppers are less likely to buy a car with a wreck on its history. A great way to combat this is to provide a copy of the repair bill. Body panel replacements won’t hurt the value too much. But anything more extensive is a red flag for most dealers. If your car has a salvaged title, this is a massive problem. The reason is that most dealers only sell vehicles with clean titles. Mostly because they can’t secure financing or sell added warranty packages. If this is the case, you might have better luck selling it to a private party or scrap yard depending on the age and mileage.
Even if you’re not trading in a car with problems, but it’s older or has high-mileage, dealers will offer less. The main reason is that vehicles that are ten or more years old are harder to secure financing on – this applies to mileage as well. If there’s more than 100,000, financing is difficult. If your car is old and it does have more miles, if it’s clean, you’ll likely have better luck selling to a private buyer. The exception is diesel engines, since they’re known to last a lot longer, and even banks consider this.
The Silent Walk-Around – The #1 Trick to Watch Out For
One of the most common tactics used to devalue a trades worth is the “Silent Walkaround.” It involves having you watch, as a salesman, used car manager, or desk manager slowly walks around your trade. Feeling it, shaking their head, and frowning. Why would someone touch a dent? There’s no real reason besides giving you the impression that it’s severe. Why would someone wipe dirt off the paint and look at closely? Again, there’s no real reason beyond playing mind games. Watch for trick questions as well, like “where did you get the bodywork done?” Regardless of how they choose to play the game, don’t be surprised when it’s tried. And don’t let it lower your opinion of the value.
A Few Extra Tips for Negotiating the Most for a Trade-in with Problems
If you’ve read through the above suggestions, you should be well-equipped to trade in a car with known problems. However, it’s always a good idea to over-prepare. Here are a few extra tips for squeezing the most out of your trade:
- Always Ask for $500 More to Secure the Deal
This tactic is as simple as it sounds. When you’re at that last critical moment and are about to shake hands, ask for an extra $500. “Make it $500 more, and I’ll sign right now” – that’s it. If a dealer gets a customer to this point, it’s in their best interest to not let them walk. Even if they say no. It’s better to have tried and won than never to have tried at all.
- If All Else Fails – Ask for Free Stuff
We get it, you don’t want to seem cheap, but in the world of car sales, haggling gets expected. Things like window tint, oil changes, details, a full tank of gas, floor mats, an auto-start, these all have a low cost for the dealer. Because of this, if it means securing a sale, they often will agree.
Let’s do a quick recap. To get the most when trading in a car with known problems, it’s best to first prepare the vehicle by having all your paperwork ready, fixing small issues like dings and dents, and detailing it inside and out. To reduce the amount of ammo the dealer has, you should always know whether you’re Upside Down or not. If there’s mechanical or body issues, get quotes from a trusted mechanic or body-shop. If there’s an accident, bring a copy of the report. For older, high-mileage cars, unless they’re extra clean, consider selling to a private party. Lastly, haggle, it’s worth it every single time.
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