To the fiscally wise this may seem like a no-brainer. But there are actually several reasons why a person may want to choose to trade-in a vehicle. But first lets examine why this is not normally your best course of action.
Why Not Trade-in Your Vehicle
Trade-In Values Suck – Spend five minutes on the Kelly Blue Book website and you will see a huge difference between trade-in value and private party sales. For example, the trade-in value for a 2005 4X4 Pick-up in good condition is approximately $11K, while the private party price for the same vehicle is $14K. That is a three thousand dollar difference. Not to mention the dealer will likely mark it up to $17K. Your trade-in is like gold to the dealer, but he or she will never let on. They often act as if they are doing you a favor by taking it off your hands.
Trade-Ins Often Result in Price Increases – Although not every dealer is guilty of doing this, many will offer you a little more on trade-in to help you cover the pay-off if owe more than it is worth. This means they may agree to inflate the trade-in while adding to the cost of the car you are purchasing. Some dealers are not as upfront as others about this practice and you may not se the hidden increase until the deal is done.
Remember, just like in the casino, the dealer always wins.
Free Online Classified Ads – The advent of Craig’s List and similar sites has made it easier and cheaper than ever to sell your car. Through these sites you can avoid getting a ticket for parking your car in the wrong place with a sign in window and the huge cost of running ads in the local paper.
Why You May Want Trade-In Your Vehicle
Selling a Used Car Sucks – Have You Ever Tried to Sell a Car? Thanks to tire kickers and buyers with a garage sale mentality the process is not as easy as it should be. Although, the use of free classifieds online can be convenient and cheap, there are drawbacks. For example you can count on getting calls from companies that will offer to sell you vehicle for more than you asking, or calls or e-mails from people telling you that you are underpriced – you have one guess as to who that might be.
In addition, you will get more than your fair share of people who will want to offer you “cash” – sight unseen – if you will substantially drop your price. At first you may these offers humorous, but after a short while you will grow weary.
Need to Move Quickly on a Deal – Sometimes the deal of a lifetime or the car of your dreams comes along. Many find the temptation too great to resist. In this case trading in your old car may be your best option. But one word of advice, take a sane person along with you. They can act as your financial mentor to help you from getting into a bad trade-in deal.
So what to do? In the end it’s up to you. If you are in a hurry, or don’t want the hassles of selling your own car a trade-in may work for you. You have to balance the financial loss with the person gain and determine which works best for you in your situation.