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THE "LOW BALL" (BELOW BLUE BOOK) TRADE-IN ALLOWANCE
Do you have any idea of how much your car is worth at trade-in time? Do you know what the dealer uses to determine how much he will allow you for your trade-in? NO, you say again? Well here's how that works:
The auto dealers across the country use information compiled from a database of used car Wholesale and Retail prices and issued under the generic name of the "Blue Book". The Blue Book is generally published bi-monthly with occasional monthly updates.
Each dealer will look up the Blue Book price of your car when they make the "allowance" for your trade-in. Most dealers will NOT tell you that they are only giving you the Blue Book "wholesale" price for your car. The dishonest dealers will try and make it sound like they are giving you a "super deal" by quoting you a VERY HIGH price for your trade-in and neglecting to mention that the price they are quoting you is actually made up of two parts:
(1) The Blue Book "wholesale" price of your trade-in, and
(2) A "discount" off of MSRP price.
Make no mistake about it, ALWAYS request a price BOTH WITH a trade-in and WITHOUT a trade-in.
Anyway, how does the "LOW BALL" trade-in allowance work? This is where the dealer is giving you LESS then fair "wholesale" price for your trade-in. The Blue Book lists an "average" price range for each make, model and year of car. The average Wholesale and average Retail price of the car is listed assuming the vehicle has at least the "standard" equipment on it and that the vehicle is in GOOD CONDITION, CLEAN and READY FOR RESALE.
The "standard" equipment included in the "average" wholesale price for most cars includes:
-
Automatic Transmission
-
Power Steering
-
Power Brakes
-
Air Conditioning
-
AM/FM Stereo Radio
A "core" group of popular options would include something like the following:
AM/FM Stereo w/Cass. Player - add $ 75.00 to Avg. Price
Power Windows - add $150.00 " "
Power Seats (Drivers Side only) - add $ 50.00 " "
Power Seats (Driver & Pass. - add $ 75.00 " "
Power Door Locks - add $ 50.00 " "
Tilt Steering Wheel - add $ 75.00 " "
Cruise Control - add $100.00 " "
-----------
Total Additions: add $575.00 to Avg. Price
The allowance that a reputable dealer will give you is based on the "average" Wholesale price of your vehicle with "standard" equipment PLUS an additional amount depending on what additional options you have on the vehicle. If your vehicle has HIGH MILEAGE on it, you can expect a smaller wholesale quote. Generally, if you average about 12,000 miles per year, the mileage on your vehicle is considered appropriate and NO DEDUCTION FOR EXCESSIVE MILEAGE should be made.
The following criteria is generally followed by a
reputable dealer when evaluating your trade-in:
(1) If your trade-in is in generally GOOD condition, CLEAN and generally RUST FREE, you are entitled to the AVERAGE Blue Book Wholesale price for your trade-in *** Plus *** an additional amount depending on the options that your vehicle has on it.
(2) If your trade-in shows more then average signs of WEAR or has minor rust on it but is in otherwise GOOD condition, your vehicle falls in the LOW range of Blue Book Wholesale price.
(3) If your trade-in is in EXCEPTIONALLY GOOD CONDITION (meaning no rust, no noticeable wear, very CLEAN inside and out and within the acceptable mileage criteria for the year of car), your vehicle falls in the HIGH range of Blue Book Wholesale price and you should get that amount *** PLUS *** an additional amount based on the options that your vehicle has on it. This type of trade-in is referred to as a "cream puff" and demands TOP trade-in allowance.
(4) If you have a VERY OLD car (over 25 years old)
that is also in EXCEPTIONALLY GOOD CONDITION, you would do far better byselling
the vehicle privately since the dealer won't give you anything near what the car
is really worth.
(5) If your trade-in is RUSTED OUT or DAMAGED or VERY WORN on the interior and/or exterior, the dealer will only give you what is called "junkyard value" for it! This can be next to nothing at all in some cases.
The range of Blue Book Wholesale prices generally are +/- 5% of the "average" value, depending on the condition of the vehicle. Also, the spread between Wholesale and Retail price for a vehicle is referred to as the "mark up". The spread between Retail and Wholesale price is referred to as the "mark down."
If the dealer's allowance for your trade-in is BELOW the range of values for your trade-in, or, if the dealer is only giving you a "low range" value when your trade-in is actually in the "high range," you are getting the "LOW BALL" allowance and the dealer is NOT reputable.
You should be able to find out the Blue Book value of
your trade-in at your Credit Union, local Bank or your local library. You can
also get an idea of the value of your vehicle by looking in the "Edmund's
Book Of Used Car Prices" available at your local book store or at
the magazine section at most drug stores.
The car dealer's all use the Blue Book (or its regional equivalent) so you're better off checking the Blue Book when determining the value of your trade-in! The Blue Book is actually called the "Kelley Blue Book Auto Market Report" and is issued bimonthly by:
Kelley Blue Book http://www.kbb.com
P.O. Box 19691
Irvine, California 92713
(714) 770-7704 / FAX: (714) 837-1904
The Blue Book will usually only list prices for cars from the past 7 years. So if your car is older than a 1987, you should check the "Kelley Old Car Report" also, published by Kelley Blue Book.
If you know what your car is worth BEFORE you shop
for a new car, you will be able to determine whether or not you are really
gtting a "fair allowance" for your trade-in.
Oh, by the way, if the dealer tries to tell you that he does NOT use the the Blue Book price but rather the "auction" price or something like that, remind him of where the "Blue Book" prices come from the "Auction" prices. The dealers all need a reference price to judge what a car is worth to them and will usually use the Blue Book "Wholesale" price when quoting you a trade-in price.
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