This very well could be part one of many, but here's a Hub that will help you. It's called
Secrets of Successful Automotive Internet Sales People
Clearly if you're in the car business, then this is a must read. If you sell anything and the internet plays a huge component, then this is also a must read as the tips and secrets are applicable to other industries. Thirdly, if you're trying to figure out who to buy from, reward the ones who go the extra mile. These are the one's who actually give a crap and this behavior needs to be rewarded and reinforced. As the consumer, you ultimately control the market and if you want more sales people to function like this, then by all means make sure you do business with them every time.
Make sure to let me know what you think of the Hub, either here on this blog or over on Hub pages!
Secrets of Successful Automotive Internet Sales People
Sunday, April 17, 2011
Saturday, February 12, 2011
Car Buying Services: Car-Pal
Car-Pal is another Car Buying Service that we here at Dave's Car Site would like to recommend or endorse as being a safe and economical way to outsource your next car deal.
In a previous post I answered the question, "Should I Hire A Broker?" We ultimately wound up looking at not using a broker per say but instead looked at utilizing a car buying service. A car buying service has no financial interest in what the dealer sells the car for nor does it accept any dealer commissions. They are your advocate.
One of the companies I mentioned was Authority Auto in Sherman Oaks,CA. This is a great company and works nationally.
Recently, I discovered another company that will do the same, it is equally ethical and genuinely looking out for you, the car buyer. Another Ace in the Hole, so to speak. Anytime I stumble on a good, quality car buying service, I'll post it here!
This company is called Car Pal and it is based in North Carolina, but they too work nationally. The founder is Lindsey Graham an she works along side Frank Anderson. Lindsey has been in the car business since 97 and was the #1 Saturn Sales Professional her first year in the business. Her commitment to putting the customer first was her ultimate secret to success and it has translated well to her new business.
I encountered Lindsay recently as part of a Social Media Contest where her enthusiasm shown through load and clear! I also believe that if Lindsay puts forth as much energy into her clients as she did this contest, then you car be rest assured Car-Pal is someone you want in your corner when buying a car.
Car-Pal has two services they currently offer. The Car-Pal Full Service and the Car-Pal Beat Your Best Deal. The Full Service will help you from A to Z as you go through the process and the Beat Your Best Deal will either find you a better deal than the one you already have or confirm you've got the best deal already. Either way you win.
So both companies, Authority Auto and Car-Pal work nationally, but for many buyers, they like to stay close to home. Authority is on the West Coast and Cal-Pal on the East. These are their areas and these are the locations they know best. Oren at Authority and Lindsay at Car-Pal know exactly who to call and where to go to get you the best deal in town.
If you don't have time, patience, experience or energy to do it yourself, you can't go wrong investing in either of these services. Here you'll find peace of mind with the head aches and hassles of doing it yourself!
In a previous post I answered the question, "Should I Hire A Broker?" We ultimately wound up looking at not using a broker per say but instead looked at utilizing a car buying service. A car buying service has no financial interest in what the dealer sells the car for nor does it accept any dealer commissions. They are your advocate.
One of the companies I mentioned was Authority Auto in Sherman Oaks,CA. This is a great company and works nationally.
Recently, I discovered another company that will do the same, it is equally ethical and genuinely looking out for you, the car buyer. Another Ace in the Hole, so to speak. Anytime I stumble on a good, quality car buying service, I'll post it here!
This company is called Car Pal and it is based in North Carolina, but they too work nationally. The founder is Lindsey Graham an she works along side Frank Anderson. Lindsey has been in the car business since 97 and was the #1 Saturn Sales Professional her first year in the business. Her commitment to putting the customer first was her ultimate secret to success and it has translated well to her new business.
I encountered Lindsay recently as part of a Social Media Contest where her enthusiasm shown through load and clear! I also believe that if Lindsay puts forth as much energy into her clients as she did this contest, then you car be rest assured Car-Pal is someone you want in your corner when buying a car.
Car-Pal has two services they currently offer. The Car-Pal Full Service and the Car-Pal Beat Your Best Deal. The Full Service will help you from A to Z as you go through the process and the Beat Your Best Deal will either find you a better deal than the one you already have or confirm you've got the best deal already. Either way you win.
So both companies, Authority Auto and Car-Pal work nationally, but for many buyers, they like to stay close to home. Authority is on the West Coast and Cal-Pal on the East. These are their areas and these are the locations they know best. Oren at Authority and Lindsay at Car-Pal know exactly who to call and where to go to get you the best deal in town.
If you don't have time, patience, experience or energy to do it yourself, you can't go wrong investing in either of these services. Here you'll find peace of mind with the head aches and hassles of doing it yourself!
Monday, January 31, 2011
Internet Marketing and Social Media in the Car Business
Now for those of you in the business of selling, we all know how Social Media can change the look, shape and appearance of your business. Whether you're selling a product or service, how you present yourself and your company to the world is important and having a strong presence in the global community with Social Media is very important.
Customers in the market for a car today look to the Internet to find more than price. They look for service, selection, convenience and ease of information. By that I mean, how easy is it to get the data they need? Is your website user friendly? Does it make it easy for the consumer to find what they need?
Quick question for you here... especially if you're in the car business, did you know that 80% of the people who visit the dealership never bother to call or email? They just show up! Now chew on this, what media source generated the highest amount of walk in traffic? Newspaper? Radio? T.V.? Did you know that 54% off all walk in traffic is due to the Internet? Imagine if 54% of the people that saw your paper ad or heard your radio spot "just showed up!" You'd literally run out of cars! Not a bad problem to have right?
So, how's your internet marketing? Most dealerships are out there winging it when it comes to marketing themselves online and they're only looking at the email/quote request to measure the results of online marketing. Bad idea when clearly the internet is what's generating most of your walk-in traffic and of this 54% of walk in traffic well over half of those folks (61%) don't call or email. Again, they just show up!
[STUDY SOURCE: AUTOTRADER/NORTHWOOD UNIVERSITY] (FYI: In less than a year, do you think this 54% has changed any???)
Look at how someone buys a Flat Screen T.V. That's how many people are shopping for cars now too. They go on line, do a little research, see a few commercials, visit a show room or two a few times, take a test drive (sometimes more than once) and sooner or later, they hook up. This process can take 24 hours up to 9 months.
So, why should they buy from you? Are you transparent, meaning do you look straight up or like a "typical" car dealership where information is hard to get? How's your online reputation? What shows up when you Google your dealership's name? How do you handle online complaints? Who's monitoring that? Everybody in every business is going to get a complaint now and again. How you handle it is what matters most. DealerRater? Yelp? Are you paying attention to what's going on over there? How easy is it to convert to a lead when they find you on line? How's your website? How do you see it, more importantly. Do you view as a necessary evil or an incredible tool? Your website is an extension of your showroom and a virtual car lot. You don't have to believe me but, a customer on your website is equally as important as a customer on the lot. How can that be? Consider how far away your competition is in the real world and know that the same competition is just a mouse click away in cyberspace.
Yes, they are making the decision to come to you based on their online experience. A well thought out and managed Social Media campaign will help you dominate in cyberspace and consequently allow more consumers to feel comfortable coming to see you and your dealership in person.
How? First have a massive presence. Be everywhere. Second, have quality content and engaging topics.
Keep in mind it doesn't have to all be about cars. What events or teams does the dealership sponsor? What's going on in the community that you can report on in a blog or on Facebook that will show transparency? Who would you rather buy from, the guy who's kid is on your son's baseball team or a total stranger? Get it? Social media can create a comfort level for the consumer akin to actually knowing someone in the business.
If you hire someone from the outside to handle this, is there someone at the dealership controlling content? Who is that? You need a car guy in there who's savvy with Facebook, YouTube and Social Media. You need someone who's sold cars and understands the process. Just because the process has moved online doesn't mean you get to skip the steps. You still need a good greeting, you still need to determine needs, you still need to present and you still need to close. The road to the sale is the road to the sale. It may be windier than before, but it's still the road to the sale. What you're closing on online is why and when the customer needs to do business with you and not the other guy who's where? Not just down the street but a mouse click away. Your Internet Department, if you even have one anymore, should be selling the appointment by showing that it's easy to do business with you first, that money will not get in the way of making a deal, and that selection and service will never be an issue.
Same only different. Who's growing in this economy and who's falling behind? Look at that and you'll see who's using and embracing Social Media and Internet Marketing. Those that aren't soon will be off in the dust somewhere hanging out with 8-Tracks, Laserdiscs and Betamax.
With that in mind, let me show you a prime example of Social Media Marketing and a brilliant, fun campaign that will result in all kinds of good things for the sponsor. I want to leave this open for comment and discussion at this point. So, here's what I want you to do:
1. CLICK THIS LINK: http://grantcardone.com/blog/c/StopDontQuitCom
2. Watch the Video.
3. Sign Up and then see what happens.
4. Take in and observe all the multitude of ways this specific social media campaign is going to help this business completely dominate in their market.
5. Come back here and leave a comment. Tell me 3 things you learned.
Customers in the market for a car today look to the Internet to find more than price. They look for service, selection, convenience and ease of information. By that I mean, how easy is it to get the data they need? Is your website user friendly? Does it make it easy for the consumer to find what they need?
Quick question for you here... especially if you're in the car business, did you know that 80% of the people who visit the dealership never bother to call or email? They just show up! Now chew on this, what media source generated the highest amount of walk in traffic? Newspaper? Radio? T.V.? Did you know that 54% off all walk in traffic is due to the Internet? Imagine if 54% of the people that saw your paper ad or heard your radio spot "just showed up!" You'd literally run out of cars! Not a bad problem to have right?
So, how's your internet marketing? Most dealerships are out there winging it when it comes to marketing themselves online and they're only looking at the email/quote request to measure the results of online marketing. Bad idea when clearly the internet is what's generating most of your walk-in traffic and of this 54% of walk in traffic well over half of those folks (61%) don't call or email. Again, they just show up!
[STUDY SOURCE: AUTOTRADER/NORTHWOOD UNIVERSITY] (FYI: In less than a year, do you think this 54% has changed any???)
Look at how someone buys a Flat Screen T.V. That's how many people are shopping for cars now too. They go on line, do a little research, see a few commercials, visit a show room or two a few times, take a test drive (sometimes more than once) and sooner or later, they hook up. This process can take 24 hours up to 9 months.
So, why should they buy from you? Are you transparent, meaning do you look straight up or like a "typical" car dealership where information is hard to get? How's your online reputation? What shows up when you Google your dealership's name? How do you handle online complaints? Who's monitoring that? Everybody in every business is going to get a complaint now and again. How you handle it is what matters most. DealerRater? Yelp? Are you paying attention to what's going on over there? How easy is it to convert to a lead when they find you on line? How's your website? How do you see it, more importantly. Do you view as a necessary evil or an incredible tool? Your website is an extension of your showroom and a virtual car lot. You don't have to believe me but, a customer on your website is equally as important as a customer on the lot. How can that be? Consider how far away your competition is in the real world and know that the same competition is just a mouse click away in cyberspace.
Yes, they are making the decision to come to you based on their online experience. A well thought out and managed Social Media campaign will help you dominate in cyberspace and consequently allow more consumers to feel comfortable coming to see you and your dealership in person.
How? First have a massive presence. Be everywhere. Second, have quality content and engaging topics.
Keep in mind it doesn't have to all be about cars. What events or teams does the dealership sponsor? What's going on in the community that you can report on in a blog or on Facebook that will show transparency? Who would you rather buy from, the guy who's kid is on your son's baseball team or a total stranger? Get it? Social media can create a comfort level for the consumer akin to actually knowing someone in the business.
If you hire someone from the outside to handle this, is there someone at the dealership controlling content? Who is that? You need a car guy in there who's savvy with Facebook, YouTube and Social Media. You need someone who's sold cars and understands the process. Just because the process has moved online doesn't mean you get to skip the steps. You still need a good greeting, you still need to determine needs, you still need to present and you still need to close. The road to the sale is the road to the sale. It may be windier than before, but it's still the road to the sale. What you're closing on online is why and when the customer needs to do business with you and not the other guy who's where? Not just down the street but a mouse click away. Your Internet Department, if you even have one anymore, should be selling the appointment by showing that it's easy to do business with you first, that money will not get in the way of making a deal, and that selection and service will never be an issue.
Same only different. Who's growing in this economy and who's falling behind? Look at that and you'll see who's using and embracing Social Media and Internet Marketing. Those that aren't soon will be off in the dust somewhere hanging out with 8-Tracks, Laserdiscs and Betamax.
With that in mind, let me show you a prime example of Social Media Marketing and a brilliant, fun campaign that will result in all kinds of good things for the sponsor. I want to leave this open for comment and discussion at this point. So, here's what I want you to do:
1. CLICK THIS LINK: http://grantcardone.com/blog/c/StopDontQuitCom
2. Watch the Video.
3. Sign Up and then see what happens.
4. Take in and observe all the multitude of ways this specific social media campaign is going to help this business completely dominate in their market.
5. Come back here and leave a comment. Tell me 3 things you learned.
Saturday, January 29, 2011
Win a Free iPad with The Grant Cardone Social Media Contest
The Grant Cardone Social Media Contest is nearing a turning point when news came down Friday night that a game changer would be coming down on Monday morning. You can find out more about it when you follow this link: http://grantcardone.com/blog/c/StopDontQuitCom
If you need to shapren your Social Media skills and learn a few new techniques to help grow your business, participate in this contest.
Prizes? How about more business when you apply what you learn? How about more traffic to your website? Would you like more showroom traffic? All can be gained from Social Media when you do it right. There's also $10,000 on the line at the Grant Cardone store, an iPad, and some steak knives.
The Grant Cardone Social Media Contest allows you to practice, drill and rehearse your social media skills. See where you're hitting it and where you're falling short. Risk free. Here's the video from Friday night, clearly, you'll see it's not to late to get in the game... So give it a try and see if doesn't show you a new way to grow your business. Any business.
Here's the original video:
So get started today! http://grantcardone.com/blog/c/StopDontQuitCom
<a href="http://www.tradefairdates.com/">Trade Fairs</a>
Wednesday, January 19, 2011
When to Hire a Broker
How do you know whether or not hiring a broker is right for you?
- Afraid of paying too much and not comfortable negotiating.
- Don't mind the process but simply don't have the time.
- Comfortable negotiating but dislike the process.
- D.) All of the above.
Keep this in mind though, you are the one doing the hiring. So, how do you know who's on the up and up and who's not?
Essentially, when you go to the dealership, your salesman is like the broker for the dealership. He is acting on behalf of the dealership to take you through the process of buying your car. Now this isn't a bad thing and neither is what I'm about to say. The salesman is acting on his and the dealerships behalf. Who's acting on your behalf? Aside from you, obviously.
So, where was I? Oh yeah! Broker... get one that's going to be your advocate. If the guy tells you his service is free. Run! That means he's getting a piece of the action from the dealer and clearly not looking out for your best interest.
Is the broker fee disclosed up front and in the beginning? That's where it should be. If you're looking for an excellent example of that take a look at Authority Auto in Sherman Oaks, CA.
First off, they work nationwide so if your in Kalamazoo, you can use them too. Secondly, Authority Auto bills them selves as consumer advocates and not brokers. They do not accept any dealer commissions or kick backs. This is the kind of "broker" you want. The guy who is truly looking out for you. Why? Because you're paying him to do so. His job is to act on your behalf, not the dealer's. Authority Auto also believes that to accept a dealer commission, creates a huge conflict of interest.
So if you're going to have someone do it for you (And by that I don't mean your cousin Larry, the guy who's bought 10 cars in 5 years. That kind of 2nd baseman will hurt you more than help you. I promise) go hire someone like Authority Auto who's looking out for you because it is their business to do so.
In business there's two schools of thought. One is, to make a lot of money selling "X" and then the other school (which is rare) is "I love "X" and want to share it with the world and I am going to make a lot money doing it." Making a lot of money clearly isn't the problem. But how you go about it, can be. Align yourself with the right people and hire the right kind of help!
Happy Shopping!
Have something you need to get off your chest? Leave a comment below or hop on over to our forum!
http://myforum.davescarsite.com/user/categories.aspx
PS - I have no financial interest in Authority Auto. They're just a cool group of stand up guys that will bend over backwards to help you get the right car at the right price.
Tuesday, January 18, 2011
Should I Run My Credit Before Going to the Dealership?
1. My Credit is Perfect!
Is it? What's your score? How many paid auto loans do you have? What's your dept to income ratio? How long have you been on the bureau? All of these things factor in to determine your credit worthiness. Are you a home owner? Is there a chance you might have had some identity theft and not know it? Did you know you'll have a different score at the Realtor office than at the car dealership? There's a more than one FICO formula and it's all based on risk.
2. My credit is so-so.
History is important. Just because you had a snag or two doesn't mean you can't buy a car. Now if you've had a lot of snags, that's could pose a problem. You're interest rate might be a little higher but not horrible. Be prepared and know what is on your credit. More importantly know why. Any dealership worth their salt will want your business and will be willing to work with you to get you a good rate. They will need to tell your story to the bank and explain what went wrong and show how those days are over. So make sure to know what's there and why. Very important.
3. My credit sucks!
In other words, you've had a lot of snags. At one point of another you may have to say this to your sales person. The good news is, they've heard it before, it's pretty common and not much will shock them. Plus, there's a pretty good chance their credit sucks too! We're all human. This also doesn't mean you can't buy. As with the middle of the road, few snag guy, it's important to know what's on your credit and have a story. It's also important to be able to prove your income, residence and have some down payment if possible. You'll probably have a high rate, but it's not forever. Getting back on track sometimes mean biting the bullet a bit. Sorry.
4. So, Should I run my credit before going to the dealership?
If you haven't seen your history or your score in a year or more, then yes. You need to run your credit before going in. You need to keep your inquiries to a minimum as too many can possibly lower your score. When you run it, no inquires are shown but when it gets run at multiple dealerships, that could hurt you. As I mentioned earlier, your score will vary depending on what reporting agency is being used and what kind of loan your applying for. If you're going in for a car loan or lease you want to check your credit to make sure there will be no surprises. No accidental late payments over 30 days. Missed a Visa payment once? Paid it last minute on the 25th day but it took 6 days to process and now you have a 30 day late. That's a problem that you want to straighten out or at least be aware of it before going in to negotiate a car deal. You'll also what to make sure everything paid actually shows paid. For example, let's say you bought a flat screen T.V. 3 years ago and paid it off in 5 months but the lender "forgot" to show it paid in full. You've got an open account that you're not using? Close that sucker!
5. My FICO score is over 700.
Odds are pretty good if you're score is over 700 that you're a responsible upstanding citizen. However, keep in mind, especially in this current economy, your score is one piece of the pie. I've seen people with 730 scores get turned down because their history and debt to income ratio made them a perfect candidate for someone who's about to go bankrupt. Where as a guy with a 655 score gets in with flying colors because he has two paid auto loans with 1 late on a credit card 2 years ago and some medical payments from 5 years ago in collections. He still made good on his car loan, so a lender will take that into consideration. Who's more likely to not pay me? That's what the bank will ask when they look at your credit report.
TIP/SIDEBAR: When you're at the dealership, BE COOL to the salesperson and the manager you wind up talking to. Remember, they're people too. Now if they're rude to you or condescending or unethical, you're free to walk and I would encourage you to do so, but keep in mind and take it from me, there are more good apples in the car salesman barrel then bad ones. It's just that the bad ones tend to get the most press and even though you may have had a bad experience once or five times doesn't mean that this one will be the same. Give them the benefit of the doubt and leave your past negative experience in the trunk of your trade...
6. My Credit Union/Bank is offering X% APR.
Perfect! This is what I like to call, your "worst case scenario." Talk to your bank/credit union. Make sure you understand their terms and make sure you qualify for their financing. Give the dealer the opportunity to match it or beat it. If they can't (sometimes the can't... really) Why? Because if you've got history with this Credit Union or Bank and they've offered you an aggressive rate and the car you want is a hot item right now with no incentives being offered from the manufacturer, then yes, there's a very good chance the dealer won't be able to compete. But see what they have to offer anyway. Try to save this discussion for the Finance Manager. Perhaps he will be able to get you a good rate as part of a package with additional discounts in the extended warranty arena or something. If he/she's creative, they'll find a way to help you.
Conclusion: Hopefully this open forum type discussion of a blog will shed some light on the credit aspect part of car buying. Have a question, comment or concern? Leave a comment below or join us on the Forum: http://myforum.davescarsite.com/user/categories.aspx Thanks for following along and make sure to share this with any and all interested!
Wednesday, January 5, 2011
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!
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!
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