But you're not giving me enough for my trade?

What if the dealer won't give you enough for your trade?  The dealership is undercutting your trade in value.  How do you handle this situation?  How about avoiding it altogether?  By avoiding it altogether it does not mean that you have to sell it yourself, although that might not be a bad idea if you're up for it.  More often then not you can get more money for your trade in when you sell it privately.  However, if you wanted to sell cars, you'd be in that business already.

So here's a few steps you can take to maximize your trade value without having to go on a test drive with a total stranger.

1.  Appraise your car on KBB.com and look at the "Fair Trade In Value"  Most dealerships will be at this number or lower.  Know that figure.  

But my car is in "excellent" condition!  Why fair?  Well let me tell you, you're probably very right that your car is in excellent condition.  However, please keep in mind that the dealership is about to assume the risk and liability of reselling your car.  No matter how cherry it is, the car will need to be inspected, reconditioned, advertised, sold, paid a commission to a salesman, etc.  There are all sorts of costs involved that get factored into what a dealer is willing to pay for a trade in.  From there the dealer needs to factor in worst case scenario which is: 'what if I don't sell it and have to send it to the auction?'  If you think a car lot is cut throat, then go to an auto auction where underbidding is the norm.  If you've ever watched the T.V. show Pawn Stars, you should have an idea.  The dealer needs to pay as little as possible for the trade in to protect their investment.

2.  Go to AutoTrader.com and get their TIM (Trade In Marketplace Value)

The TIM program over at AutoTrader is pretty cool.  You put in all the details about your trade and they'll give you a value and guarantee the value PLUS a direct you to a dealership you can go to to sell it if you want with no obligation to buy anything from said dealer.  Not bad, right?  Two things here.  When I say all the details, I'm not kidding,  This appraisal tool is real specific.  You be as specific as you can and be honest about the condition.  This will avoid any weirdness at the dealership.


3.  Compare those two figures with your payoff.

How'd they look?  Were they close or way off?  Average them out if you need to.  These two figures will give an estimate or ball park idea as to what you're working with here.  The next thing to do is...

4.  If the payoff is higher than the value, is the negative equity something your willing to either pay cash for or finance into the new car loan/lease?  Are you willing to move forward?

Basically, what do you do if you're upside down?  How bad is it?  In today's economy some banks are willing to assume negative equity and some are not.  With all the foreclosures and BK's, it's a big risk.  Even if you're credit is perfect.  In the last couple years, more 700+ FICO's defaulted on their mortgage than any other credit group.  Sometimes you got to think like a bank.  So are you OK with putting the money down or not?

5.  If the answer is "no" stop looking until the answer is "yes" or you pay off your car, which ever comes first.

Sorry Charlie, but that's the way the cookie crumbles.  If you're not willing to step up and assume the responsibility of the negative equity then you either can't afford it or you're not 100% sold on the car you're interested in.  Believe me, when you really need, want and like to have something, you'll find a way.  This is why I say you're not 100% sold on what you want.

FYI, the value of your car and what you owe on it are two separate things.  If you only owed 12 dollars on your car would you want 12?  I didn't think so.  So why should you want $28k for it when it's worth $22k?  Just because you owe 28k!  Well, cars lose value.  Remember the cookie thing.


6.  If the answer is "yes" then take your car to Carmax and have it appraised.

This is your "worst case scenario" value.  What ever you get from Carmax is the least you should take from the dealer.  If the dealer won't take it in for that value then sell it to Carmax and payoff the remaining loan or put the negative in the new new deal.  Yes that's doable, regardless of what a dealer says.

Now if you are no where near a Carmax, they do have an online appraisal tool you can use to get a pretty good estimate and buy bid that should only help you get top dollar for your trade.

FYI, if at any time you thought to yourself, well I've seen a car just like mine on-line selling for "X," so my car must also be worth "X!"  Well...  no, actually that's not what it's selling for.  A car listed on a website is on that web site because it hasn't sold.  Nobody pays retail for a car.  Paying MSRP for a new car is very rare and so is buying a used car at it's original list price.  Expect lower and be happy when it's higher.  Assuming you're reasonable, the dealer will be too.

Finally, buyer beware.  Know what price you're paying for the new car and what rebates, incentives and  dealer cash is in place before entering into negotiations with the dealer.  Many times a dealer can make it look like they're paying more for your trade when they really are not!  For example, if your trade in is worth 12000 and the dealer has dealer cash of 1500, they can use that to "show" 13500 for yours and claim they are "stepping up" on your trade.  Meanwhile that money could have been used to reduce the selling price of the new car.

Questions?  Leave a comment below and share your thoughts!  Thanks for following along!