#trade in vehicle
Trillium Automobile Dealers Association
10 useful tips on trading in your vehicle
Sandy Liguori – Tada President 2011-2012
Nov 09, 2011
When car owners are in the market to buy a new vehicle, they usually want to sell their existing vehicle.
They can sell it privately, which requires some legwork, patience and risk, or they can trade it in to a new car dealership. A trade-in refers to any vehicle that a car buyer intends to sell to the dealership as part of a deal in acquiring another vehicle (new or used).
The benefits of a trade-in (as opposed to selling privately) are the efficiency and convenience of buying and selling at one location, where you may already have a relationship, and significant tax savings.
The actual sales process and completing a purchase can be handled quickly even within a couple of days. Many busy consumers like the idea of dropping off their older vehicle and choosing a new car at the same place.
The other benefit is the tax savings. The value of a trade-in is deducted from the selling price of the car you re buying. This reduces the taxable portion that must be paid on the new vehicle.
Let s say you want to buy a new car worth $40,000, and your trade-in is appraised at $20,000. That $20,000 is applied toward the price of the new car, effectively reducing the selling price to $20,000.
In this case, the customer would pay tax on $20,000 ($2,600), as opposed to $40,000 ($5,200), a savings of $2,600.
Another consideration when trading in a vehicle is price. Here are 10 useful tips to ensure that you get top dollar for your trade-in.
- Understand that a dealer will pay top dollar on a wholesale level, but not on a retail level. That s because there are costs incurred by the dealer on all trades, such as vehicle inspections, reconditioning, advertising and sales commissions.
- Study the market. Used vehicle websites will give you a fair approximation of the value of your car. Canadian Black Book (canadianblackbook.com) is considered the industry benchmark for providing market values for cars, trucks and SUVs on the wholesale level.
- Be realistic. Optimal prices are based on vehicles in immaculate condition, and few vehicles meet that standard. Knowing the true market value of your vehicle will give you leverage when negotiating.
- Make the car presentable. Vacuum the floors and trunk, and remove any dirt and debris from interior surfaces, including the dashboard, seats and door panels. Fix obvious damages, such as a cracked windshield, worn out tires or broken headlights. Repair any dents and dings in the car s exterior.
- Gather all service records. If you can prove that you have taken care of your vehicle with recommended service maintenance, it will command a higher price (either at a dealership or privately).
- Be honest about the car s true condition. It doesn t pay to lie or mislead the buyer; the truth about the car will be revealed in time. Dealers use the CarProof services to verify a vehicle s history.
- Don t remove or replace any parts or accessories after your car has been appraised. To do this is unethical and just plain wrong.
- Determine the current market demand for your make and model, and whether the dealership is overstocked for that model. Supply and demand and market conditions will affect how much a dealership is willing to pay.
- If you are driving an older model vehicle that is on its last legs, find out if there are any clunker programs offered by the manufacturer. Sometimes a manufacturer will offer a minimum trade-in allowance (approx. $3,000) on these older vehicles.
- Remove any personal items before delivering the vehicle to the dealership. Check the glove compartment, underneath seats and in trunks.