Why is my trade in worth so little?

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Why is my trade in worth so little?

Not everyone asks this question, but many do. Especially just when they are thinking of buying a new car and they have just had their first offer and been disappointed with it.

If you feel the price for the trade-in is too low (and you’re not getting any higher offers), please be aware of the following:

  • For “common” cars, the average turnaround in a car yard is 4 months. Low volume cars vary, but can easily take 9 months to sell. During this time, the car:
    • must be initially repaired for scratches and dents. A “bottom-half” is the industry term for a dent repair and respray of the bottom half of the vehicle.
    • needs to be financed by the dealer.
    • must be advertised.
    • must be maintained so it starts and runs and is clean.
    • takes up one space in the yard, from which the dealer needs to generate a minimum of $x each year – regardless of the value of the car. This especially hurts cars under $10,000.
  • The Redbook (and Glasses) valuation guide
    • is based on cars in perfect condition. New tyres, no dents, no scratches and mechanically sound with a full service history.
    • contains old data that is only periodically updated.
    • sells “valuation certificates”. People love buying these to show others what a high valuation they have on their car. Higher valuations = higher certificate sales?
    • doesn’t buy cars. It would be fantastic if the Redbook bought cars at the valuations they give. Unfortunately they don’t.
  • Don’t compare the trade-in offer to advertised prices. Used cars advertised online (or elsewhere) rarely sell for the advertised price. There is always room to negotiate – sometimes $1,000s of dollars.
  • Some (almost always private) sellers advertise their cars at super-high prices on the off-chance that they will get lucky. Some advertise their cars for years this way. Online advertising is often very cheap and “advertising until sold” is a fixed price regardless of the period of time.

Here is seven way to handle a disappointing valuation:

  • Accept the offer for the trade-in.
  • Add the following special condition to the Sales Agreement: ” I reserve the right to remove my trade-in from the sale prior to delivery of the new vehicle.”
  • Clean the car inside and out, but do not have it detailed.
  • Take photos from the front, from both sides, the rear, and through the open driver’s door (showing steering wheel and instrument panel).
  • Set the price above the dealer offer and a little below what the dealers are selling similar cars for.
  • Put a well written advertisements in your local newspaper. Make sure you include all of the details we asked you for (i.e. Make, model, registration expiry etc.).
  • Print the advertisement on A4 paper and put it on your car – both side windows. People in your area, your work colleagues and friends will then be aware it is for sale. Many prefer to buy a “known” car and dislike having to scour the Internet every night looking for prospects.

This will maximise your chance of selling the car privately, and is basically a way of doing due diligence on your trade-in. You will find that most people are prepared to wait until you take delivery of your new car before they can pick up your old one.

Carbroker.com.au