Negotiating A Trade-in
Why?
When you’ve made your mind up which car you are buying, the question is “What to do with the old car?”.
If you’ve made your mind up you wish to sell it yourself, click ‘here’ for the relevant advice. But many people prefer the ‘trade in’ method - and, depending on your point of view, there are good reasons for doing so.
Trading in means using the value of your old car to offset the price of your new one. So, say, the price of your new car is £10,000 and the value of your old car is £5,000, you can give the dealer your old car and £5,000 (either in cash or on finance) to make up that £10,000.
The method is simple and saves an awful lot of bother trying to sell your old car. The problems arise with valuing your old car, agreeing a price for the new one and working out a fair combination for the two.
So, here’s some information and advice on negotiating a trade in.
How to negotiate:
First of all, you need to understand what’s happening from the dealer’s standpoint.
By the time it gets to negotiating your trade in, he’s very close to completing a deal with you. So it’s in his interest to offer you the best deal he can whilst not eating too much into the profit he’s making on the new car.
The dealer will value your old car using very set criteria. Condition, age (number plate), number of owners, mileage and service history all affect the price he will offer you. Having checked your car over, he will look up the ‘book’ value of your car and decide how much he wants to offer you for it against your new car.
Why doesn’t he simply offer the book price? Because there are many variables, most notably how much profit he has in the new car. Remember that profit is how the dealer makes his living and pays for the overheads of the dealership - which is fair enough, he’s probably got a mortgage and kids to pay for like the rest of us.
It’s all swings and roundabouts. If he gives you a big discount on the list price of your new car, he will be less able to offer you an ‘above book’ price for your trade in. Likewise, if he offers you a storming price for your old car, he will take less off the list price of the new.
The most advantageous way to deal with it from your point of view, is to negotiate the price of the new car first. Don’t discuss the trade in at this stage. When the price is agreed, introduce the trade in. Be tough, if he asks you what you are expecting, don’t say - tell him you prefer to hear his offer.
His first offer will be low to test the water with you. Say it’s not enough. When he says he’s gone as far as he can, tell him ‘thank you’ and you’d like to take time to think about it. If he really thinks he’s close to a deal that you’re going to walk away from, that’s when you’ll know if he has anything left to offer at all. If he lets you go, you’ve pushed as far as it will go.
At this stage he may suggest that this offer won’t be available another day. That’s the moment when you have to really decide if you’re going to walk away or not. Take your time, do not be rushed. Move away from the dealer and discuss it privately with your partner (if you have him/her with you). If you decide to accept it, say yes and see if you can squeeze a tank of fuel and a set of mats on top!
Dealers are trained professionals at negotiating. Remember they want the sale just as much as you want to buy. Be tough and don’t pay more than you want or that you can afford.
For further information on negotiating a price, click ‘here’.
