how a Car Dealer ACTUALLY decides a trade’s value.
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- Опубликовано: 25 дек 2018
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Car dealers typically look at a trade in, and place it into 3 different categories.
1. A Car they can sell on their lot
2. A Car they have to send to auction
3. A Car they want nothing to do with
Whenever a customers car is appraised, the dealer is also aware of what the KBB and CARGURUS values are for they vehicle, so he/she is also seeing what you are seeing.
The dealer will typically offer you 20% less than what the retail value is of your car, and deduct any repairs/replacement parts it may need to make it retail ready.
If it needs to go to auction, he/she will offer you 20% less than the auction value to 1. make a profit, 2. give themselves some padding in case the vehicle doesn’t actually sell for that amount.
The best way to go about selling your car is to do it on your own. If you absolutely must sell to a dealer, the best route to go is by selling it to a dealer that is most likely to keep it on their lot as they will often not have to tack unnecessary transport costs to it, and can accurately validate what it will sell for.
For more information, or for help with your next new car purchase or lease, please visit online: bostonautomotiveconsulting.com 
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Oh my gosh that’s helpful! I’m planning on selling my newer car next year, so I’m just doing some preliminary research right now. That’s great info!
Thank you for the video Ari, very helpful!
Super underrated video. Thanks man!
Solid advice. Thanks Ari. Subbed
3:53 was a straight GEM for those of us driving older model cars!
Excellent description. Thanks.
Thank you learn a lot with this video. love is love I’m from Springfield Mass love to see the state up standing high representing thank you much blessings brother
Thank you, Ari, for schooling me on this stuff. Thought I was a sharp Boston guy, thought the Audi dealer in Shrewsbury was jerking me around, but you enlightened me. Your example is exactly what my car, a '15 535i loaded with every option, came out to be: KBB $20K, dealer offer $14K on trade-in for '18 Audi Q7. Feel better now that you've explained it all. Thanks.
Thank you too David for watching :) I appreciate that comment! Cheers.
Nice topic, I like it!
One note to add, Taxation on your new car purchase. If trading in your car, you are only taxed on the new car price minus your trade in. For example; New car is 30k, they give you 16k for your trade so you will be taxed only on the difference of 14k versus taxed on 30k. Why does this matter? If you insist you can get a thousand extra selling it privately but then pay more taxes on the overall deal, how much did you really gain? Time is money, know your cars value, know how much you value your time and effort, sometimes you come out ahead trading it in.
Excellent and honest advice 👍
Great video. Thank you.
I actually got what I wanted for my trade, but I bought the same make and model at a dealership and they sold my trade on their lot.
I learned a lot in a short period of time
Thank you for your help
Ari, you mention KBB and Cargurus....what about Edmunds and NADA? Thanks for all your informative vids !
I bought a 2001 Camry with 122k miles for $2900. Mint condition, 6cyl, leather interior.Tracked down the original owner. He said the dealership told him they were junking the car and gave him $500. They are thieves and he was stupid.
How were you able to track the owner???
@@ChiOfo Old receipts for the car in the glovebox maybe? Some of them have the customers phone number on them. And trade ins I'd say are usually local.
It makes sense. I can get a trade in value and a retail sale value to help figure this out.
My Silverado is a relatively popular truck and in good condition. Not perfect but very nice shape.
If the trade is 22,000 and the value of sale is 25,000 what price would I expect if it were sold on the lot?
Great stuff Ari. I'll be selling my car soon.
Thank you!
So if I try to sale my car from the dealership that I bought it from initially is it possible that they buy it from me pretty close from what I bought it for or no ?
This video should really have more views/likes. When I worked at the dealership (but this was many years ago), I noticed that most trade-in values (when compared with consumer available resources), were typically between the KBB 'rough' and 'average' condition values. However, the dealership was going off of a completely different resource, which is what you were describing: The Black Book value of which what vehicles were typically going for on the auction market. Also, if they were going to turn around and sell it on lot, then they'd typically give 'average' if the trade-in was within very clean condition and mileage was within the 10k to 15k per year threshold.
My favorite trade-in story was a couple brought in a 535xi GT. I had personally never seen one before then and it was a very beautiful car. I believe it was 2 or 3 years old with 18k to 20k miles per year on the clock (higher mileage for age of the vehicle), they thought they would get a few thousand over their pay-off, but it turned out they were upside down over $20k. So, obviously, the deal was put on hold until they could figure out what exactly they could do with their car. They eventually traded in their vehicle, but it wasn't my deal so I don't know the terms of the result.
That's when I learned two things:
1. Never go above 72 months on a new car without approximately 20% of 'msrp' negotiated off or whittled down in some way.
2. That's how the, "we pay-off your current car and get you into another NEW CAR!" 'deals' work. I mean, $1200/month on a Honda Accord? Oh...you rolled over a F-150 into an Explorer into an Accord? Nice...
Thank you
Should I tell them about my trade In before negotiating out the door price.
Can I ask to see the invoice on the car I am potentially buying and agree to pay 1 or 2 percent above invoice? What do you think of these ideas. Sometimes there is a benefit to trading car in because of the taxes. For example if your car is worth $20,000.00 and you buy a $40.000.00 car you pay tax on the $20,000.00. Where I live the tax is 13% which is $5200.00 on $40,000.00 and $2600.00 on $20,000.00.
That is a $2600.00 difference. As you mentioned the dealer is making possibly 20% on your trade in so that is $4000.00 dollars. That would mean I would have to get $24,000.00 in a private sale. What do you think?
Thank you!
Does this imply that I should buy a used car from a dealer at about 15 % below the KBB dealer price?.
Thanks alot
Hey bud. I like the videos. I hope to employ your services someday soon.
Friendly Fyi the volume on your voice was a bit low on this video & some others.
peter primes thank you Peter! Promise, next videos audio will be perfect. I keep forgetting audio levels because I always edit in the dead quiet of my office.
I always wonder if trading in your car is a better option if the car you're trading in has issues that might make it a headache to sell privately. I know that selling privately, you don't really have to but you should disclose any issues, like if it needs a break job, or its been in an accident etc. This will make a private buyer more hesitant or it will make them want the car for way less than you're selling it for. As with a Trade-in, if its a decent car that still has value on the market, the dealer will at least give you some money for it, the dealer can fix it up for cheap since they use their own mechanics and body shop
Great video. Thanks for sharing. Any tips on buying with cash. Is there a way you can loan your self money. Any way that you can make a cash purchase work in your favor.?
You can always loan money to yourself but then you will have to answer to Bubba if you don't keep up the payments
Hoping these will help, currently gonna try trade my 2014 mustang v6 with 76k miles for a 2020 wrx 🙃 need a 4 door for the kids
I have a 2018 Chevy Colorado and want to trade it for a Tacoma 4x4 off road will I get ripped off??
What is your personal fee to help a Baltimore businessman buy a new car by year end. I have started the initial prenegotiations.
Good deal.
Typically dealers go by Manheim to lookup what MMR ( Auction value ) is at currently, thankfully I have access to this so when they want to hit me at 40k when MMR really is 45k I simply show them what adjusted MMR is and watch their jaw drop. Unless my car has something they can ding me on I would never take $1.00 less than MMR.
Understand the dealers mindset and you have to have the same mindset. I was looking at a base Honda Civic and the dealer wants $26,940 + $1,499 markup coming out to $28,439. I can’t see that car costing more than $22,500 so I’m out if the dealer can’t come down 20%.
I always used Manheim at a friends used car lot to figure out what I would offer when looking to purchase a used car & to double check what a dealer may offer for trade - minimize negative equity or carry none into the car deal. How Manheim applies dig statistical data that is always in flux: 👉🏽 By applying statistical analysis to its database of more than 5 million used vehicle transactions annually, Manheim has developed a measurement of used vehicle prices that is independent of underlying shifts in the characteristics of vehicles being sold.
After I wrote this - got me thinking - NADA populates data pull / car prices based on zip code - example all wheel drive Audi price variance if same year make model selling in the NE United States southern FL for example 😉
🤣🤣
I currently own a 2020 Chevy Camaro that has a value of $27000 with. However, I still need to pay off $12800 for it so I have positive equity. My intention is to trade it for a 2023 Cadillac CT5. Can you please advise me on what to do based on your experience?
Unless you're so wealthy it doesn't matter, generally speaking it makes more sense to sell your vehicle privately, despite the headache. If you want more than wholesale or a little less, sell it yourself. I'm getting ready to sell my 2014 Honda Civic, which is in good condition. With current mileage my Civic retails for about $10K, according to KBB. If I went to trade it in, they'd likely offer me $6K, as the car needs a two paint chips and a tiny door dent repaired. Since I'd take $9k privately, the trade would cost me like three grand.
I have a 2017 Camry low miles under 30k zero interest. I want to trade for something newer and that I’ll like more to keep but financially I’m thinking smartest just to keep. I owe 15000 seen value can 17or 14k .. dealer offered 17k for it but I’m not sure
Hello from Boston Mass
Damn, 20% is a lot... I like the parting words, that it's best to try and sell your car on your own.
They usually make more than that
Two years ago I traded in a 2009 Altima for $5000 toward buying a lightly used Subaru Legacy. Surprisingly, the dealer was selling the Altima themselves and I kept an eye on the posting for the car. They started it at $8000 and the last time I saw the posting it was down to $5900. And they had bought new tires for the car. I got the Legacy for a bit under the median going price, but I killed it on getting as much as I could on the trade-in. I was there for around 4 hours to get it done, but I think I did really well.
But I thought Dealers were crooks ??
Keep in mind dealers make TONS AND TONS AND TONS of profit off the back end (fees on the car they sold you, fees on the car you traded in, financing, future service visits, extended warranties, pin striping, etc). There is no industry more profitable than the car business, none! So even if it appears they're selling the car for close to what they gave you in trade in, they make more money in a day than most people make in a year.
@@TaylorZ2 Bottled water is far more profitable than a car dealership . You dont have to finance or service your car at a dealer you dont have to get an extended warranty or pinstriping either . These are all your choice . Do you work for free or are you on welfare because i dont know of any business that is not about making a profit .
@@TaylorZ2 For sure, I'm not implying the dealer didn't profit off me at all but I'm sure I did better than the average person they're bending over lol
Wth would a perpsn trading in their car ahve to pay for auction transportation
Well I’ve checked and mines is over 1700 and I know that I may not get but maybe 500 if I’m lucky because it’s a 2008
whats salvage vehicle
worth 2004 chev
One thing to consider is that the price of the trade reduces the price of the vehicle and then reduces the sales tax
But the markup steals the tax advantage you’re talking about.
The sound volume is too low.
WAY TO0 LOW!
Love how they want to make 20% on the customers loss without splitting the difference at the very least
If you know how to play the game, you can get them to split the difference, or come close. Walking out is the best defense/tool you have. Don't worry about the "sweet deal" on the new car you think you're going to lose. They'll call you come the end of the month.
Remember the salesman is not your friend, if he is smiling when you drive off you did it wrong.
@@Bulletcoreif the customer is happy that means the sales guys made $100 and the sales person is unhappy.
Thank you for the tips. This actually happen to me...went to trade in a Subaru Forester at an Audi dealership and they offer $15k max, went down the street to Carmax and got $20k .
It was crazy they would not budge.
It's crazy right? Just picking the wrong place to trade in can hurt you so much!
@@negotiationguides I've found that about half of dealerships in my area will match CarMax and each other. I let it be known that I'm not going to trek all around the metro for them to offer me the same value. That's what was happening. They know what they are going to offer before I even bring it in there.
@@negotiationguides How much should you be able to get this for, do you think? cargur.us/vf1Zk
@@thesoundofthesuburbs So you went to all the Dealers in your area trying to get rid of a car ? You must have a lot of free time
@@sarahann530 Or...a couple Saturdays, maybe? If it costs me 10 hours over two Saturdays (5 hours each Saturday) to squeeze another $1000 from a trade you bet I'm going to do that. That's $100/hr, minus expenses (fuel primarily. Maybe an accelerated oil change, but even that is probably negligible).
they look at the black book and give you rough if they cant let there mechanic look at most people cars are fair or rough then you look at noticeable problems with a vehicle like paint or dents on nicks in the interior km aren't the only issue more issues less money there tired of the old car
you're coming down 20% from trade-in but not from retail. I sold my car to a dealer who said they were going to auction the car but they placed it on their lot. They lie all the time.
So, can this 20% profit be kinda reversed when shopping for a used car on a dealer lot? In other words, if you make an offer on a used car, of 20% off the sticker price, the dealer probably wouldn't take it? Or since they want to make 20%, did they probably set the sticker price at 30%, knowing someone will try to make a cheaper offer? I guess what I'm asking is, is 20% off sticker price a good starting point for negotiations?
We have a smart one here ladies and gentlemen , of course that's what you can do ! The Dealer will decide if what you offer is enough profit on that car taking into account what he has in it , the interest in the car and the amount of time he has it on the lot . If a car is as cold as a witches tit he may sell it for what he has in it just to free up cash if its a hot seller in your area he may hold out for the full amount .
@@sarahann530 "we have a smart one here..." was that sarcasm? Was I a dope for asking that question?
Dave Crocket nope, an excellent question. You are right on target, everybody always says they got screwed on their trade, if you are a used buyer, use that knowledge to your advantage. Most times I’m betting, moving the inventory if even for the tiniest of profit to the dealership is still profit versus continuing to hold it.
@@nopresetsnarklimit1675 Awesome, thank you for all the info.
Dealers are using Vauto
So I should buy my next used car from a private seller?
I'd only buy from a private seller that understands the car VERY well. I'm going to be asking about the maintenance schedule. Where it was done and/or who did it. Where does the vehicle travel. I'm going to ask where the manual is. If there is a windshield sticker for the previous oil change, I'm looking at when it's due and how long since the previous change. Etc. There're too many people that try to sell a car at the highest KBB value when it's body/frame is covered in rust and wires are spliced together with nothing but electrical tape.
I put almost 15k into my truck. And every dealer said I De valued the vehicle and they can’t sell it know.. 🤦🏻♂️
And this is right 90% of the time. People do not want to buy a car with someone else's bs most of the time so the dealer needs to replace tge components with factory ones or sell it for less.
Yea don't do that.
There are a few vehicle and mod combinations that will raise trade-in value. I've only seen this on pick ups and Jeep Wranglers. A good brand lift kit that was installed properly can raise the value. Just about everything else will lower it. A custom vehicle is built to the individual's taste. It's a harder sell to the masses. It's like trying to sell a Metallica Album at an R Kelly concert
Don't trade your car in ever.
I agree. I sold my car on craigslist for 3 times as much as the dealer offered me on trade in.
Yeah its not that hard to sell a car yourself for 2x the money if its a cheap car or if it's a more expensive car for 5-10k more.
@@THEGAMINGHELP101 that's a problem for the buyer though because you have private sellers now trying to sell their cars at KBB retail prices.
PlAyed at double speed only got two of my minutes
If you lease, you have a buyer.
This is not all facts thats if you are not a well informed customer, walk into a reputable dealer month end or month end December if you car is worth 22,000 you can actually get 21,500 and negotiate both your trade in and your new car separate because they are separate transactions.... sometimes the dealer dont care abt how much they will make on your car they are more into selling you a new one, but dont let them get you on the new one, negotiate the best possible deal on new car check true car see the lowest price that car go for in the area make that offer now you have, your trade price negotiated, the new car price negotiated, now you do not let them get you on the apr make sure you get the beat apr your score qualities for and dealers will try to mark this up so keep pressing and be willing to walk away but on the 31st of december they will not let apr stol them from moving a vehicle unless its no possible senario and you just a bad real bad candidate...
The dealers will have a listed wholesale price & give you a Lowball offer so they will make alot more than 20%. I have seen $3000 trade in cars on the lot for $6000 . So that's double not 20%. Never believe a dealer.
How many people will pay the 6000 ? You are going to work down that price
i WISH THE DEALERS HERE WOULD OFFER ME 80% OF WHAT IT WAS WORTH. THEY ALWAYS OFFER ME THE THE LOAN AMOUNT
You don't have to tell them what you owe on the loan. In fact, if they ask are you going to trade your vehicle tell them, "I haven't decided, yet."
Also, work the Out-the-Door price on the car you're trying to purchase, THEN work the maximum value for your trade AFTER the Out-the-Door price. For the dealership, they prefer to bundle the two transactions together because they can move money from the selling vehicle to the trade-in and vice versa. However, for you it works best to keep them separate since you are selling, and buying. It'll probably be a long day at the negotiation table, but it would be worth it.
I personally don't really care as I'm totally fine with walking away from a 'deal'. I think a lot of people stay in deals when purchasing a car because if they've spent all this time researching, going to the dealership, spent 4 hours of their life negotiating on financial terms they don't like, they take it because they don't want all that time to, 'go to waste', which is fallacy you won't get all of that effort back. You'll just commit to a financial decision you don't like. Aside from that, cars RARELY appreciate in value, so waiting *typically* saves you money since generally the value of that vehicle goes down, unless there's just a straight gangster promotion going on and you can't really get that until an end of year special or something.
@@ryanshannon7703 The value of the trade also goes down as the age and miles increase so waiting does not make much difference until the trade is paid off .
@@sarahann530 That is dependent upon the rate of depreciation vs rate of pay-off. If you're not paying off at least at the same rate as depreciation then you're underwater and probably shouldn't be relying on a trade-in to secure a new loan on a vehicle with what is likely a greater loan to value than what you're currently obligated to. But, newer vehicles will *generally* depreciate faster than older vehicles, it would be inaccurate to suggest otherwise. Of course there are always exceptions, but for the general population that's just how it works with nearly any asset.
I would say the only situation in which I'd be 'very incentivized' to sell a car for less than I owe on a loan is if I put 2000 miles on it a month and for whatever reason I need to get out of it and into a newer or lesser mileage vehicle. At that point it actually makes it a lot easier: go to CarMax, get an appraisal. Go directly to the dealership to which you're trying to work a deal and if rolling over the negative equity doesn't make sense for your financial situation (as you're essentially refinancing the car into a different car loan) then just sell to CarMax, pay off the residual balance, then work the deal with just the car itself. The point of the trade-in for this scenario is to try and utilize the dealership to pay off as much as your loan as you can, and refinancing the residual along with the negotiated car price. The concept isn't that difficult to understand. But, if you're just an average, everyday driver that puts about 1k miles on their car every month then waiting a couple weeks or even a month isn't going to dramatically change your trade-in value compared to a new or nearly new vehicle that's been sitting on the lot for the same amount of time.
@@ryanshannon7703 As I said , nothing much changes unless you pay off your vehicle by waiting . Comprehension is not your strong point, no wonder you wonder around dealers aimlessly
Stop buying cars because it’s shiny and has 4 wheels. Take the time to research and have a reason to buy a certain car. 99.5% of people will buy any car on the lot because all they care about is getting a new car.
Can't read lips.
How interesting.................however; Dealers/Used Car Manglers always think: what can I get for this trade??; "Auction, Retail, Sold To A Wholesaler etc; THAT is how it works; Very Simple. If you dont like what you get for a value, sell the car for yourself; If you have decided to trade it,, what do you care what the dealer does with it?? 20%?? 25%? Trade is worth what "someone" will 'write a check for'; (Wholesaler, Auction, Retail, Salvage Yard etc;) Just like with jewlery, milk, clothes you want to make as much as you can per unit; No Dealer has time to sit down and analyze like this video portrays; Or I should say doubtful most of them do; **WHAT CAN I GET FOR JOHN SMITH'S TRADE; HERE IS YOUR FIGURE MR SMITH; WERE CRAZY? NO PROBLEM, HERE IS A COUNTER OFFER; WE ARE STILL CRAZY? NO PROBLEM YOU HAVE THE OBVIOUS CHOICE OF SELLING IT YOURSELF. IN FACT, SEE IF A CAR BUYING SERVICE/CONSULTANT/COACH WILL WRITE YOU A CHECK FOR WHAT YOU WANT MR SMITH.**😁🤣😂