Why is my trade in worth so little?

Loading Vehicle Picker...
Initialising Vehicle Picker...

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.