How To Determine Your Trade In Value – Cincinnati, OH

When starting your search for your next vehicle, there are several things that must be taken care of before purchasing the next perfect car. Getting your insurance in order, setting up your loans, and researching car reviews are all important things to handle before you go in to purchase your next vehicle. However, nothing will be more beneficial than researching the trade in value of your current vehicle.

Having a solid understanding of the trade in value before you make any decisions concerning your current vehicle is going to ensure that you will get the best possible return from your investment.

Research, Research, Research

The first thing that absolutely has to be done is research. Dealers use current market value when appraising your car, so do the same research to know when you are getting a fair offer. Even taking 30 minutes to do some quick searching on your exact make and model could save you thousands. Think about it from an hourly rate. If someone offered you $2,000 for a half hour of work, I think it’s fair to say that most of us would say yes.

Start by looking through the classified ads. Searching on websites such as Autotrader, CarGurus, Cars.com, and even Craigslist can give you a solid base to start at. Make sure when searching you are taking in all factors. Make, model, trim package, mileage, year, even color are all important. If your current vehicle has any special features or options that were added, ensure you check that as well.

Looking through these websites will get you up to date with what your particular make and model is worth, and will, therefore, ensure you know what a good trade in value will be. Keep in mind, trade in value is typically a small amount less than market value, but we’ll get to that later.

Make sure you take into consideration your location as well. In certain areas, some features are far more desirable. Remember, if you wanted a particular feature, then other people probably do too. Options such as AWD is much more relevant in northern states that get a lot of snow than down in Florida. To the opposite effect, convertibles will typically hold better trade in value in areas where they are more pertinent.

Online Appraisal Tools

Next, you’re going to want to check out the online appraiser tools. These are web pages that have been set up to help you as a consumer to better understand trade in value and resale costs. These webpages use very specific algorithms to determine approximate trade in value or private party value.

Keep in mind that these are rough appraisals, and don’t always take into consideration many other factors and can often be slightly off, so don’t base all of your research solely on these tools. Tools are meant to help you, not to do the work for you. Take all online approximations with a large grain of salt.

This all being said, these tools are extremely useful and can ensure you are at least in the ballpark that you need to be for your trade in value. Websites such as Kelly Blue Book, Black Book, and NADA can give you trade in value ranges for your specific make and model in your local area.

Figuring Out Your Trade In Value

Now that you have a solid understanding of your cars market value, you have to determine what your trade in value will be at the dealer. Unfortunately, trade in value is typically slightly lower than market value, as the dealer has to be able to make a profit on the vehicle.

A good rule of thumb is trade in values typically range anywhere from $2,000-$4,000 less than fair market value. This seems like a big loss at first, but when you look into it from the dealers perspective, it starts to make sense. In the section below, we will explore what all goes into the sale when a dealer purchases your trade in.

When deducing your trade in value, take all of the research you have conducted, and determine the fair market value of your vehicle. Then you will want to reduce what the dealer will need to make on the car, which they typically expect to anywhere from $1,000 to $2,000 on a trade in vehicle. After this, take into account any repairs or maintenance that have to be done to the vehicle. Remember, the more damages and repairs needed, the more they will have to reduce the cost.

Overall, you can typically expect $2,000-$4,000 below what the market value is for your vehicle. Take into account all factors, particularly repairs and maintenance that have to be done. When dealers perform the repairs on the vehicle, it costs them just as much as it would cost you to have them done, minus the profit they would make from it. Profit is the smallest amount that repair costs cover though. Parts, labor, shop usage, time compensation, and time loss all are added into the cost, and this cost the dealers just as it costs you.

How Do Dealers Appraise Your Trade In

Dealers buy all of their cars at wholesale and sell them at retail value. So regardless of how they purchase the vehicle, they will purchase at wholesale value. For this reason, one can expect to get slightly less than market value for their vehicle when trading it in.

When determining trade in value on your vehicle, dealers take several factors into consideration. First, as stated, they expect to make anywhere from $1,000-$2,000 on a trade in. They also have inspections and repairs that are done on most vehicles. Even if your car is in near perfect condition, typically dealers will still conduct fluid changes, install new tires, or perform similar maintenance. If your vehicle is in need of further mechanical or cosmetic repairs, the dealer has to take these into consideration for their resale, since they will typically repair most damages to vehicles before selling. They also take other factors into consideration as well such as location (they might have to transport the vehicle to another location) and inventory (they may have several other vehicles like yours on the lot already).

Keep in mind, a dealer is a business, and they have to make their profits somewhere. There are many costs to running a dealer, and people just like you and me feed their families from their salary there. Your trade in and the dealer sales pay their bills and put their food on their tables. So when taking discussing trade in values at your local dealer, remember they are humans just as you.

Take Away

When determining trade in value, remember to first, establish the fair market value for your vehicle. Take into account the location, color, features, drivetrain, and much more when calculating market value. From this, reduce the dealer costs, repairs, and dealer profit from the market value. The result is a rough estimate for your trade in value. Once you finally get to the dealer and start negotiations for your next car, you will be ten steps ahead and will have a much better understanding of what to expect from your current vehicles trade in value.

McCluskey

Here at McCluskey Automotive in Cincinnati, Ohio, we use Kelley Blue Book to value your trade in. You can easily check your value before stepping onto the lot by using the Value Your Trade tool on our website. Once you have your trade in value you can easily apply for financing on our website as well. By the time you step onto our lot, you will have all the difficult parts out of the way so you can let us help you find your dream vehicle.