Step 2 – Negotiating your Trade-In at the Dealership
How to Trade in a Car
Once you arrive at the dealership, you’ll be ready to negotiate your trade-in. Unfortunately, this part of the negotiation cannot be done via email since the dealer will need to see your car in order to appraise it. But not to worry, you still have some leverage.
Before they take your car keys, mention…
- Your purchase is contingent on getting an acceptable amount for your trade-in…
- …But if you get a good value for trade-in, you’ll be happy to complete any customer satisfaction surveys you receive with the highest possible marks. As mentioned before, often times the results of satisfaction surveys are linked to their compensation.
After he gives you an initial trade-in offer…
- If the dealer has not beaten your estimate, show him your printed outside appraisal. Tell him that if he cannot beat this deal you might need to go and sell your old car to the other dealer first and then come back. Usually, they will not want you to leave and may bump the price.
- Do a quick comparison against your outside appraisal. If the outside appraisal is higher, feel free to separate the two transactions and not trade-in. However…
…when comparing a dealer offer to your appraisal, it is important to remember that dealers in most states will give you a credit for the value of your trade-in when determining the purchase price for sales tax calculations. This can result in a significant savings. These savings are not available if you sell your car to a third party.
To do a quick calculation at the dealership, remember the following formula:
trade in value times 6% (or your state sales tax rate) = tax savings
Make sure you add this tax savings to the dealer’s trade-in offer before comparing to your outside appraisal.
If you were to buy a $25,000 car and had a $15,000 trade, your sales tax would be on $10,000 instead of $25,000. In states where the sales tax is 6% (the norm), that would result in a savings of $900. Therefore, in this example, if the dealer appraisal comes in anywhere up to $900 less than your outside appraisal, you are still better off selling to the dealer. And of course it’s less of a hassle for you as well.
$15,000 X .06 = $900