Private Party vs Dealer
Determining your vehicles value: Sell private party or dealership?<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
The obvious answer is...........................................well, it depends!
For the most part, private party will get you the best bang for your buck. Auto dealers make more money on used car sales then on new car sales. With that logic, you would think they may pay you more money for your used car in trade - Not usually the case.
Kelly Blue book ~ which you can look up online is a good resource. You can simply put in your cars make, model and how many miles it has on it along with "condition". You can also let Kelly Blue Book know if you would like to get a "value" for trade in or private party. They are usually different.
One thing to remember (in WA state at least) is when you trade your car in, this can save you money on new car Tax. You will get a credit from the "old" car that can reduce your "tax" on the new car.
The problem is usually that most people are UPSIDEDOWN in the car they currently have.
What does this mean? Well, if you have a car that "books" out at $8000.00 (value to a dealer) and you owe $9500 on the car, then you are $1500 negative.
In most cases, rather then negotiate a better deal on the "new" car you wish to purchase to offset this $1500, the dealer usually ADDS this $1500 to your new car price. When this happens, you have just entered a vicious cycle of negative equity. What does this mean? Well, thinking down the line when you may plan to look for another new car, you may be UPSIDEDOWN again in this car. What does that mean? Well, the extra $1500 you paid for the "new" car at the time of purchase has been added to the "true value" of the car you bought. You start out $1500 backwards right from the start.
The auto dealers want you to believe they can't give you more then Kelly Blue book for "trade in" value vs. private party. This may be what's said, but is not true. They just simply choose not to.
Remeber, the cars sitting on the car lot are always looking pretty shinny. When you go to sell your car, make sure it looks the same. Chances are you will get more for it looking in as close to new condition as possible.
So, with that, it's usually better to sell your car private party. If you go to Kelly Blue book, you will see the difference in price right on your screen. The private party price is always more then the dealer price. Now, logic would tell you that if Kelly Blue book says your private party price for the car is $9500 and the "trade in" value to a dealer is $7500 - then the dealer has some room to give you more money. Well, again, usually not going to happen when they can just put that amount on the back of your loan.
If you own your current car outright, then the hassle of selling private party may not be what you want. No matter how your slice it, you will be getting money for your car on trade. The problem - since you don't actually see this money and it is just deducted from the "new" car, it is much easier for the dealer to "mark up" "things" to eat away at your equity from your trade.
Do I hate dealers? No, but the simple fact is they really do not look out for the best interest of you, the client. They look out for the best interest of the dealership. No matter what anyone says, that you must believe. Again, some are nice, friendly and easy to get along with. In fact, many of you may even have a friend or family member who told you to go to ZXY Company for your next car. "They gave me a pretty good deal and have always treated me well".
The problem with that is a simple one and best explained like this:
Your friend or familiy member usually thinks they got a good deal on the car they bought because the salesman told them they got a good deal.
By the time I bought my 3rd new car, I was shocked to learn that each of these three cars was "sold for less than any car I have ever sold" says the salesman. "You really beat them up in my office today"! Imagine that, each of the three cars over the years were the "lowest" sold prce cars they have ever seen. Sure, I have a bridge to sell if your interested -
Next time you're with friends, ask them what they paid for the car they currently have. I be not a one of them can give you an accurate answer. By the time we leave the dealership, we usually don't have a clue.
These people do this for a living. The higher the sales price, the more they make. Simple math.
If you have the time and energy, it is well worth your time to sell your car private party and go into the dealership with cash in hand. If you do, not only will you make more on your used car sale, but if you go into the dealership with a "down" payment rather then a trade, the chances are you will get a better deal. Just remember to NEVER tell the dealership that you have the cash in hand. BIG NO NO. Always work your best deal - and never take the first "offer" they give.
While you're doing your research to find out what is best for you (private sale vs. trade in) remember this very important step. Look into the auto you are interested in buying. Find similar cars online and see what they are selling for. A car is only worth what someone is willing to pay for it. Do your homework and it will pay off.
