No matter what, there will always be a element of “horse trading” in the car business. Even with one-price stores and value pricing, there will always be negotiating taking place in buying a car – especially if you have a trade in.
The question most ask with a trade is, “do I sell it on my own or let the dealer steal it from me?” Maybe steal is a strong word, but that is how most of us feel.
The first rule of a trade-in is you will always get more if you sell the car on your own. The question you need to ask is, “Is it worth the hassle for me to sell my car on my own?” For many people, the answer is no.
They do not want to put an ad in the paper, have strangers coming to the house, and deal with the DMV to get out from under the liability of the car. For many of us, it is easier just to trade it in to the dealer when you get another car.
Here is an example of how it works. A 1989 Buick LeSabre Limited V6 has a Kelly Blue Book of $3,975 wholesale, and $6,550 retail. Air conditioning, power steering and AM-FM stereo are included. Add power windows, power door locks, tilt wheel, cruise control, and cassette. Now the car is worth $4,300 wholesale and $6,985 retail.
The car has 93,726 miles on the speedometer, so we subtract $275 making the actual value $4,025 wholesale and $6,710 retail. Assuming the car is in excellent condition, meaning no major dents or repairs needed, the car should sell privately for $5,225. If you trade it in, the dealer will try to give you $3,000 but could be talked up to $3,450.
If the dealer takes this car, it will need to go through smog and safety, and any reconditioning to get it ready for re-sale. By the time all this is done, the dealer could have $4,000 into the car. So now he puts the car on the lot for $6,985, probably advertises it for $5,500 and will be lucky to get $4,995 for the car.
If you sell the car on your own, you will get more for it, but is it worth the hassle? That is the question to answer. Fortunately, the information I have given is available to you on your trade.
Consumer Reports has a number (1-900-988-3838) that will give you blue book trade value for about $1.75 a minute. You can get the blue book information for free at the library or on the Internet’s World Wide Web.
Donald Grant is an employee of Magnussen Buick-Pontiac GMC in Menlo Park.
