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Important FYI About Trading In Your Car

Updated on December 6, 2011

Sooner or later everyone will want a new or newer car. There are two avenues: sell your car privately to get the most value and then go buy a car, or, trade in your car for a new or newer car.

Most car dealers use Galves or Blackbook to determine your car's trade in value. Most do not use Kelly Blue book, which is for consumers.Galves is primarily for dealers and is not free. Blackbook is free and one can google it to locate it. Other consumer websites are truecar.com, which tries to get the lowest price on a new car, and Cargurus.com, which is a great site to locate cars as it checks with vehix and many other sites. Some dealers also rely on autotrader.com to determine the trade in value.

Trading in the car is usually not the best thing. The reason being is that no dealer will take in a trade unless they can make at least $1,000 in on the trade. This is true even if your car's real value is more. The trade in value is more about the car you want to trade for than about the real value of the trade in. For example, a 2005 Outback LL Bean wagon, sold new for $28K. The same car with 90K miles on it now, retails for $15-16K on most lots. However, the person who traded it in might have got anywhere from $8400 (autotrader) or $11-12K (blackbook, KBB). How much depends on the car he wants. The more expensive it is, the higher the trade in will be. Let's say, the the car wanted was a 2007 VW Jetta S with 50K on it. It retails for $11K. There is no way the dealer will give $11K for the subaru (per KBB or Blackbook) because the VW retails for the same and no profit will result from it. So, the dealer will offer not more than $10K, maybe less, in order to make a profit on the deal. Then, the Subaru will retail for $15-16K and when sold, the total deal profit will come to $6-7K. Dealers want to make money at both ends of the transaction (the trade-in and then later the sale of the trade in).

The real value is ignored on the Subaru and lower than normal because the VW is low retail. Anyone in their right mind knows the top of the line Subaru wagon must be worth more than the basic VW Jetta model. Thus, the dealer ends up with the better end of the deal-always. Autotrader seems to favor dealers with artificial low trade in values, while KBB and Blackbook are more realistic.

To determine how much a car depreciates, simply look at the same car three years earlier to see what they are retailing for and at trade in. This will also help you determine if the car you want will remain of value.

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    • imkd profile image

      imkd 

      7 years ago

      thanks for your help. few weeks ago i looked for a used car and didn't like it so much.

      Thanks for this information this will definitely help me to select one ;)

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