Trade in Cars When Buying New Cars Advice

Succulent on 09/04/2021 - 22:01
Last edited 10/04/2021 - 22:04 by 1 other user

Dear my trusted OzBargain advisors,

Does anyone have any experiences buying a new car from dealer and trade in your old car?

I have done some reading on below on trade ins when buying a new car. I just want to ask for your personal opinion/experience on this.

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Based on my reading, car dealers would always value the traded off car much lower than the market value, compared to if we are selling them privately.

What do you think would be the reasonable offer below market value? (e.g. 20% lower?) Based on your personal experience when getting value for your trade ins, how much lower usually dealers would offer them below the market value during the trade ins?

Is there any tips or trick when trading ins old cars for new cars with dealers?

Can we just walk over to any dealers and ask them how much they would value our old car before we commit buying the new car from them? I am assuming they may not just value our cars when we rock up to their doors. They would expect some kind of "commitment" from us to buy the new car from them, before they put any value on our cars?

Thanks in advance for your inputs.

Poll Options expired

  • 57
    I would sell my old car privately when buying new car from dealer
  • 4
    I would trade in my old car when buying new car from dealer
Automotive

Comments

  • deme on 09/04/2021 - 22:08
    +3

    Can we just walk over to any dealers and ask them how much they would value our old car before we commit buying the new car from them

    Yes

    • Succulent on 09/04/2021 - 22:34

      Does that mean consumer can bring that offer to other dealers and see if different dealer would beat them?

      • mskeggs on 09/04/2021 - 22:35
        +3

        Yes

        • Succulent on 09/04/2021 - 22:37

          Indirect car auction haha..

          • mskeggs on 09/04/2021 - 22:40
            +6

            @Succulent: The dealers still need to make a profit, so none will give you as good a price as a private buyer, everything else being equal.

  • nephilim on 09/04/2021 - 22:11

    It's pretty common in USA to use the trade in as a way of negotiating lower payments, but doesn't make much sense in Australia, any savvy person would make a free appointment at Aussie or a free broker to ask for advice before signing off the a car dealers loan.

    • Succulent on 09/04/2021 - 22:33

      I am planning to buy the new one outright, so at least i can avoid the hassle of loan negotiations.

  • Wickz on 09/04/2021 - 22:19
    +3

    Dealers will offer less than market because they need to:

    A) make a profit when they resell it
    B) clean / detail / repair any dints or damage etc prior to resell
    C) cover the costs of the road worthy certificate, transfer etc.

    Trading in is a convenience and much less hassle than selling privately, but not always the best financial option. I have done both (trade and sell privately) for some of my past car purchases.

    For one car the trade in value I was offered was ridiculously low so I sold it privately a few days before I picked up my new car.

    For another, I told them how much I wanted for trade in (based on my own research and knowing the current market) and gave them the option to match it or else I would sell privately. I wasn’t in a rush to sell the car so if they said no it didn’t matter much to me but to my surprise they said yes. This worked out great as when my car was delivered I drove the old one up the dealer and left in the nice new shiny one. :)

    • Succulent on 09/04/2021 - 22:30

      Great advice thank you!

    • Muzeeb on 09/04/2021 - 22:33

      D) ring around wholesalers and see who offers the highest price and that is your trade-in price. Most dealers don't want your car. They are only offering you an easy disposal service to win your business on a car they have for sale.

      • Succulent on 09/04/2021 - 22:35

        "Wholesalers" as in the used car dealers?

        • Muzeeb on 09/04/2021 - 22:40

          No. Wholesalers are another tier of car sales and generally don't deal with the public directly.

          They purchase trade ins cheap from dealers or purchase ex-rental or fleet vehicles. These vehicles are then mostly sold on to a used car business for a profit. They rely more on trade volume than big profit margins.

        • mskeggs on 09/04/2021 - 22:43
          +1

          You can buy cars “as traded” from wholesale dealers. These usually are dirty, have dings and paint chips etc.
          They are the old cars traded in that aren’t worth shining up to sit in the expensive dealer yard.
          Some independent used car yards will buy them to sell too.

      • spackbace on 10/04/2021 - 01:16
        +2

        ring around wholesalers and see who offers the highest price

        No one will put a value on your car sight unseen. If they do, be prepared to take it there and they start pointing out what needs to be spent, deducting it from that high figure they said initially

    • thatonethere on 10/04/2021 - 12:41

      Dealer also has to offer a warranty too

  • Simoneee on 09/04/2021 - 22:29
    +1

    In terms of trade in, the dealership will offer you alot less than the market value as they will need to make a profit on the resale of the vehicle

    • Succulent on 09/04/2021 - 22:35

      Yep i understand they need to make a profit. But how much lower do you think would be reasonable?

      • Muzeeb on 09/04/2021 - 22:43
        +1

        There is no rule of thumb percentage. If your car is awesome and in line with the types of vehicles they sell you may get a better trade in offer as they will put the car in their yard. More often than not they don't give a flying f@#k about your trade in.

      • mskeggs on 09/04/2021 - 22:44

        You will leave about 25% of the vehicles value if you trade in versus private sale.
        (Just based on what I have been offered and what I have then sold for a few cars).

        • Succulent on 09/04/2021 - 22:56

          Ah ok, thats not too bad.. I was guessing most would start with ridiculous offer like 50% from market price. Never been to one so I wasnt sure.

      • Simoneee on 09/04/2021 - 22:52

        According to Carsales, it costs the dealership an average of $5000 but will depend on the year and condition of the vehcile (I'm not sure on how reliable these numbers are tho). You could always ask the dealership for a trade in value and compare it to private sales listed on facebook marketplace or carsales.

        https://www.carsales.com.au/editorial/details/advice-how-muc…

  • mskeggs on 09/04/2021 - 22:39

    A dealer giving you a higher trade in won’t give you as sharp a price for the new car.
    The only time to trade in is if you need the car gone immediately and can’t wait to sell privately, or if there is an issue that isn’t a big deal for a dealer to fix, but is a hassle for a private buyer (e.g. lost keys or expiring rego).

    • Succulent on 09/04/2021 - 22:44

      I think i read news recently, that since pandemic started, the sales of new cars skyrocketing as there werent many new cars being produced lately (limited stock). The price for new cars seems to be less likely can be negotiated nowadays.

      Yep, I am not rush in selling the old car, so based on inputs above, either i will use @wickz advices in telling them how much I expect from them or i will opt to sell them privately.

      • Muzeeb on 09/04/2021 - 22:48

        Have you even read the articles you linked? Every question you have asked is answered in your own linked articles. I'm confused.

        • Succulent on 09/04/2021 - 22:52

          I did, What I after is comment like from @wickz where there are different inputs that are not covered in the articles above.

  • pharkurnell on 09/04/2021 - 22:51

    theres about 50 variables in what they will give you… as in if its popular car and they have a few in stock they give you nothing… condition, klms, rego, tyres, service history, same as if you were buying.

    when we traded the ex's Mazda in the dealer called wholesalers to see what value, so not really selling to the dealer but his wholesaler.

    • Succulent on 09/04/2021 - 22:57

      Got it, just learned about the car wholesaler concept today.. :)

  • spackbace on 10/04/2021 - 01:20
    +4

    Old car with high mileage - sold to a wholesaler, dealer less likely to move on price
    Within 8yrs old and under 100,000kms - dealer will keep, might come up a bit on trade value

    Dealer of the same brand as your car will be more likely to keep it (again if it's new enough) as opposed to a competitor branded car.

    Full service history - dealer more likely to keep

    And all depends on new car margin. They could falsely inflate your trade value by using the margin in the new car, if you haven't negotiated on the new car.

    • Succulent on 10/04/2021 - 10:31
      +1

      Good thing we ticked almost all boxes

      9 years in 2021, under 100,000 kms, full service history, never been in accident and we are planning to try the trade ins to Hyundai dealer (Our car is Hyundai).

      Finger crossed!

  • yellowfever on 10/04/2021 - 07:06

    What is your car? Year and kms? State?
    I’ll give you a market value assessment

    • Succulent on 10/04/2021 - 10:30

      Oh Cool, Hyundai Elantra Active Auto, 2012, just reached 90k KM, NSW

      Redbook said 8k to 9.8k with average of 140k KM. But due to Covid everyone is selling the same car model make and year, with KM at 100+k to 200k at $12k to $15k (Source gumtree and carsales).

      What dya think?

      • yellowfever on 11/04/2021 - 14:05

        Without being disrespectful, $9-10K max is a good deal and that's conservative. If you are thinking it will sell for $12 to $15K bracket, there are so many better cars, eg Honda Accord Euro 2012 for same price range.
        The Elantra is only 110kW and really has nothing outstanding. The majority that look at a Hyundai because it is cheap, if it is in the higher price category people will start looking at different cars (eg. Japanese cars)

        • Succulent on 11/04/2021 - 22:42

          Thanks for the input, appreciate it!

  • EightImmortals on 10/04/2021 - 07:13

    I'm in this process at the moment actually. Dealer offer bugger all for the trade in so I'll sell it privately. A little bit of extra hassle but I'll be a couple of grand better off for it.

    (current car is 16 years old and has 265K on the clock, but goes well and has been looked after)

  • This Guy on 10/04/2021 - 07:32
    +1

    There is a few hundred to $10k+ in mainstream cars depending on the model, trim level and how much a dealership loads their cars.

    If you buy a base level micro car, your trade in price will suck. If you buy the very top trim ute outside of any driveaway campaign there should be money to give you a few k off and market value on a good condition trade.

    It depends on the dealer, but market price for the base trim, minus $3k, minus their cost to make road worth and presentable. This will usually make the business ~$1k average per used car as cars will often sit for an average of three to nine months, depending on the skill of the actual valuer, costing discounting, interest (these cars are usually bought with finance), depreciation and staffing.

    Don't get me wrong, if they flip a trade in a week they will usually make good money off it. But most yards have plenty of money pits which will bring the average down.

  • pegaxs on 10/04/2021 - 09:02
    +2

    And if you are planning on selling your car privately, make sure you start the selling process way in advance. In COVID times, it may move quickly, but when the market returns to normal, it may take weeks or months to sell.

    Go to a stealership and get a trade in price for your car. This will let you know the wholesale value. Next, get on Carsales and look up the dreamers price of similar vehicles to yours. Pick a point somewhere between these two prices.

  • Jugganautx on 10/04/2021 - 09:43

    Had a 2008 Kia Rio with 140000 km on clock in decent condition and Toyota offered 1200 max for it when I could have sold it privately for $4000.

    I just wanted to get rid of it at the time but looking back should have sold it myself.

    Think of dealers like cash converters when trading in your cars. They need to make a decent profit even before selling to their partnered 2nd hand car yards.

  • loropy9 on 10/04/2021 - 10:21

    I was selling a 10 year old corolla with 100K on the odometer 5 years ago. Dealer offered $2500 initially. I said no way and they offered $4000. I sold it privately within 24 hours for $6300 without even trying hard to negotiate. Carsales.com.au is your friend. Mind you corollas are easy to sell. It took a couple of months to sell my relatives honda city which was similar age and kms.

  • Keplaffintech on 10/04/2021 - 10:25

    Trade-in is a convenience you pay for.

    If you have one car and you need it for work etc, it's almost essential to be able to drive-in and drive-out with your new car.

    Also means not needing to detail the car, have buyers inspect or drive it.

    But it will cost you a few $k for that convenience.

  • bobbified on 10/04/2021 - 11:22
    +3

    When doing a trade-in, forget how much they tell you your trade-in is worth. The most important figure is the "changeover" price.

    Changeover price = New car price - Trade-in price.

    Not only will a dealer hit you with your trade-in car, they also won't discount the new car as much - so you really get a double whammy.

    Eg: The RRP is $35,000 for a new car. If you go in with a trade-in, they might tell you that your trade-in is worth $10,000 and say that the changeover value is then $25,000.
    However, if you had gone in without a trade-in, you could probably negotiate to say $32,000 (depending on what car it is and it's demand). Therefore, your trade-in isn't actually worth the $10,000 they told you or listed on the contract. The real figure you got for it was $7,000 for it.

    Trade-in isn't necessarily a bad thing, but as long as you understand what you're getting yourself into and make an informed decision.

    • Succulent on 10/04/2021 - 11:35

      Yep thanks for the input!

  • Euphemistic on 12/04/2021 - 10:42
    +1

    The more you get for your trade in the less discount you’ll get off the new car.

    You’ll be shocked at what they offer, it’ll start out very low.

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