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So exactly what is my trade worth?

May 19, 2010

The trade, oh the dreaded trade. That is    everyone biggest fear in negotiating a purchase.

How a dealership comes to that number is a process, not complicated, but a process. It starts with your salesperson doing a trade appraisal on your vehicle, with you present to answer any questions. He or she then turns the appraisal sheet into the dreaded sales manager. The sales manager or in some cases the used car manager will walk around you trade and check for wear and tear, he will probably drive it as well. All he is looking for are items that may need reconditioning that will make it marketable on his used car lot. Not to rebuild it new but just take out the rough edges. Then he will pull a Kelley Blue book, a NADA book and finally an auction report. While the Kelley and NADA most of us are familiar with, the auction report will report how many vehicles the same or similar to yours ran through the auction and what the sold for. It includes make, model, miles and the location (major city) it was sold in. The auction report is what your car is really worth because that is what one like yours can be purchased for……….but into the equation goes reconditioning and marketing costs and finally an advertising allowance. So the car dealership buys or takes trade at wholesale and sells at retail.

It’s mind-boggling even to a person in the business and to keep it simple I usually just tell folks, the one you’re looking at costs too much, you never get enough for your trade and the payments are usually too much for too long. But, if you really like the car you are looking at and it will suit your needs, everything else will fall into place.

So tell me, what are you driving now?

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