What About My Trade?
Now that we’ve gone over how dealerships come up with online pricing, let’s discuss how your potential trade affects the deal. First of all, how do dealerships come up with the price of your trade?
Just so we’re clear, you can give as much information over the phone or online as you want, but most dealerships will not give you a solid price until they physically see the vehicle themselves. Some things that we look for when looking at a potential trade-in are the overall condition of the vehicle, both interior and exterior, specifically the condition of the tires, upholstery, as well as any scratches or body damage. The next two things that are important are the vehicle’s mileage, as well as its year. Although it might seem obvious, it’s important to note that the lower the mileage and the newer the year along with the better the condition of the vehicle, the higher your trade value.
When we get all of that information, we take it to the sites that I mentioned in my last post; we look at NADA for typical trade-in value based upon condition, and couple that with the auction prices we find on Manheim and come up with a very reasonable price for your trade in.
We’re going to take a personal time-out and just discuss something a bit sensitive here. I know that it may seem callous or unsympathetic on the dealerships part when they just seem to casually toss out a number that is not what you’re expecting. However, in the dealership’s defense, they weren’t there when you brought your firstborn home in that car, or there during the road trip you took when you proposed to your now spouse, or there when you took those late night drives because it didn’t seem like your life would ever be right side up again. There is a significant emotional tie to something that you most likely spent every day in, so it just makes it that much harder to hear a number associated with all of those memories.
Once that number has been established, a lot of people chose to put that value towards their new purchase. It is important to note that any remaining loan balance will be paid off up to the trade-in value amount. If your loan balance exceeds the trade-in value amount, this inequity can either be offset by an additional down payment or rolled into the new loan with lender approval.
Have any other questions about the financial aspect of your loan? Leave a comment below!