- Guest Menu
-
- » Home
- » Login
- » Register
- » Forums
- » Scion tC Rides
- Scion News
-
-
- on Nov 15, 2008
-
- on Jul 26, 2008
-
- on Jun 17, 2008
-
- on Jun 11, 2008
-
- on Jun 08, 2008
-
- Scion Generation
-
- Scion tC Parts
- Aftermarket Scion tC speed shop carries Scion tC exhaust, Scion tC intakes and more Scion tC parts at ScionGeneration.com
- Club Scion tC Decals
- Viewing Thread
-
Home
> Marketplace
> Sale/Trade/Wanted
> Trading A Car. What You Need To Know.
Trading A Car. What You Need To Know.
Related threads: ( Click here to view ) Thread Topic Replies Views Author Last Poster I need some advice on a car 47 495 clutch clutch @ Dec 01, 2008 Car Myths --- just a few to know 4 148 Orin Orin @ Nov 30, 2008 Trade In Value + Car Buying Tips ----- Car Already Traded 30 377 beedee KansasCitytC05 @ Nov 30, 2008 Should I trade my car? 30 184 lilez19 Vicious @ Nov 09, 2008 need a $130,000 car suggestion 79 877 skunk ThisGuyRett @ Oct 09, 2008 Orin
I've been keeping an eye on appraisal experts and during my job as an auto sales consultant I've learned quite a bit. I'm sharing my knowledge with you now.
Most people trade their vehicles after 3 years of ownership even though they swore they'd keep it till the wheels fell off. When it comes time to trade will you be able to? Even if you'd really like to trade your vehicle, you may not be able to. Do you know why?
In the business it called being hooked, buried, in the hole or upside down
What does it mean to be upside down?
All cars are depreciating assets. All cars depreciate, some more than others. So what determines what your car is worth? Demand.
The demand for a car that drives great and doesn't break is much greater than a piece of crap car. If there aren't enough great cars to meet the demand the value of the car goes up. It's a simple case of supply and demand.
Now, back to being upside down:
You just bought a GLS automatic Hyundai Accent 2005, back when it was new. You financed 18,647 after taxes.
Now it's 2007 and you're ready to trade. Your car has only 24,000 miles and it's in good condition.
Guess what... you're Hyundai after being appraised is only worth 7,200 dollars to a dealer and you still owe almost 15,997 dollars. You're 8,797 dollars upside down.
If you have too much negative equity and your credit isn't golden a bank will not finance you. Banks love to finance NEW cars because they can make their money back when you ditch payments.
When picking a car it's important to see it's resale value.
What are dealers looking for when you trade?
It's not going to matter how much you shine it up. Some things cannot be hidden.
The following will reduce the value of your car:
1. High miles--the lower the miles the better.
2. Bodywork--if your car has been wrecked and someone tried to fix it, an expert can tell and it reduces the value of your car.
3. Paintwork--experts can see if you've painted your car. This kills the value of your car.
4. Title Status--recovered theft vehicles,salvage titles, flood vehicles will suffer value bigtime.
5. Modifications--these do not improve the value of your car. You must replace parts back to stock or the value will suffer.
6. Interior--if the interior is torn and dirty, the value will be much less.
7. Tires--bad tires reduce value.
Below is a link to Kelly Blue Book. Dealers do not use Kelly Blue Book. Most dealers use something called the Black Book. Kelly is good to get a rough idea of the value of your car, but it's not the end all. In the big picture, Kelly Blue Book does not buy the cars.
Kelly Blue Book
[#] Mar 13, 2007 08:58pm Vicious
- El Chupacabra
Awesome write-up 
dare I say, sticky material? :o
The Thread Killah
[#] Mar 13, 2007 09:13pm Orin
bump
[#] Oct 26, 2007 11:04am ShadowtC - Detailer
Oh wow. I didnt know that. Thanks for the heads up. Of course, Im keeping my tC. 
[#] Oct 26, 2007 01:28pm On3Sh0tBlaz3
- Chief Mechanic
great info! thanks orin
[#] Oct 26, 2007 02:20pm Orin
glad to help when I can
[#] Oct 26, 2007 02:21pm cessblood
- Master Mechanic
nice thread.
I don't pimp my ride. I'm a pimp in my ride.
http://www.myspace.com/cessblood
http://www.facebook.com/profile.php?id=708110639
http://www.itsmyscion.com/cessblood
CesswillStompdashitoutu[#] Oct 26, 2007 03:21pm tc1stgen
- Scion Guru
I hear what your saying. I am in car sales as well and I have to deal with all of the uneducated customers (that really aren't as educated as they think) who can't seem to understand why their car is basically worthless. Especially the domestic market right now. Investing into a Ford, Dodge, GMC, etc. is the worst choice you could make, because they have no resale value and it cause many people to be upside down.
Another thing to add is there are two important terms in regards to a trade that are very important. One is ACV or the Actual Cash Value. The ACV is what your car is really worth, real money. The other term is Trade Allowance. TA is basically ACV plus any discounts. For example: Your trade could be worth $10,000 but I can tell you that I am giving you $12,000 in order to put together a deal. What I am actually doing is giving you $10,000 for your trade and taking $2,000 off the price of the new vehicle. It is a way of managing the money to make it look like more. We call it playing with the numbers. We have all heard those commercials, "Push, pull, or tow in your trade and you will recieve $3,000!" That is exactly how they do it. It is just a trade allowance and really it is a marketing scheme to get people through their doors and into the dealership, so they can have the chance in selling you a car. Is it still a good deal? To a certain extent, yes.
Now at the dealers, we are in business to make money, just like any other business. We will always try and steal the trade. As sales people we are not just trying to sell you a new car, but we are also trying to sell you on the price we put on your trade. For example: If your trade ACV's for $10,000, I am gonna try and give you $7,000-$8,000 for it and try to get you to accept that. Why you ask? Because that is another way for me to make money. For example: Let's say you accept $7,000 for you trade and the new car has a mark up of $2,000. I take the ACV and subtract it from what I am giving you ($10,000-$7,000=$3,000) I take that $3,000 and I add it to the mark up ($3,000+$2,000=$5,000) This means I have grossed $5,000 for the dealership by writing this deal. For me this would be a $1,000 commission. So for a couple of hours, I make a decent check. Now if you can sell a few of these a day, then your doing real well!
So it is important to try and get the ACV (which the dealer will never tell you) and the discount. The best advice I can say is use the internet as best as you can. You can find out how much of a mark up there is in the new vehicle so you know what you have for negotiating room. Also try and do research on your trade the best you can. Orin is right we don't use Kelley Blue Book, but you can use that as a guide. 90% of the trades are considered fair market condition and go based on that. If you are at a big dealer and they want your business, they will write the deal. My store is huge and we write deals all the time where we are losing $2,000. But we can do that cause we can make it up somewhere else.
I hope this helps everyone in the future, but just don't come see me, lol!!!
Ask me about Innovative Car Works!
LED's is their specialty!
http://www.ItsMyScion.com/tc1stgen
http://www.myspace.com/tc1stgen
http://www.tunerfriends.c...mber.php?u=13341&8685
http://www.cardomain.com/ride/3084016
"NOS is like a hot girl with STD's, you want to hit it but are afraid of the consequences!"
[#] Oct 26, 2007 05:54pm Orin
tc1stgen is 100% correct
I've done some really nasty tricks to hold profit and one of the meanest is to tell you your car is worth less than what it is
One customer trading his 2007 Ford F150 with 1600 miles believed me when I told him his truck was worth $18,500 when it was worth $22,500 at the time.
On top of that, I sold him a vehicle at full sticker
nice fat commission
[#] Oct 26, 2007 06:02pm tc1stgen
- Scion Guru
Yeah I have been smacking people pver the head quite a bit lately! God I love my pay check!!!! What type of cars you selling?
Ask me about Innovative Car Works!
LED's is their specialty!
http://www.ItsMyScion.com/tc1stgen
http://www.myspace.com/tc1stgen
http://www.tunerfriends.c...mber.php?u=13341&8685
http://www.cardomain.com/ride/3084016
"NOS is like a hot girl with STD's, you want to hit it but are afraid of the consequences!"
[#] Oct 26, 2007 07:25pm chrisblack2k1
- Window Washer
If at all possible, I try to sell my car myself. You may have to put some effort into it and it may not happen overnight, but chances are you're going to come out ahead. If you must trade your vehicle, try to negotiate the sales price on the new vehicle before ever telling the sales associate you have a trade. Once you settle on a cash price for the new vehicle, then you can begin negotiating a trade-in value for your used vehicle. Most salesmen (or saleswomen) will not want to negotiate this way, but it's the best way to get a real idea of what you are getting.
If you are purchasing a new vehicle, you better put at least 20% down or plan to drive it for the majority of the loan term. Otherwise, when you go to sell, you'll likely be upside down. I see people trying to sell used cars for what a new one stickers for and I just shake my head...
Just some additional food for thought...
Chris
[#] Mar 18, 2008 11:41pm Orin
^ I agree with just about everything except putting 20% down. All vehicles are depreciating assets and it's not wise to invest cash in a depreciating asset. Save that money for car payments.
On the flip-side, some people pay for their cars almost entirely with cash and only finance about $7,500 dollars.(usually the smallest amount a large finance company will accept)
If you don't have to put $1,000 dollars down or $2,000 or $3,000, then don't. A lot of sales consultants want you to put your own money down because it makes the bottom line look much more attractive and it's your own money, not theirs.
The only exception to having money to put down is having poor credit. A loan will look much more attractive to a lender when you are financed by The Bank of ME, MYSELF & I. If you have a 500 beacon score, save up about $1,000 dollars and be prepared to walk out if the finance rate is outrageous.
[#] Mar 19, 2008 09:39am chrisblack2k1
- Window Washer
Well, a car is a depreciating asset wether you pay cash or do 100% financing. You'd better at least be prepared to pony up the cash for the tax and title fees.
Let's say you purchase a new Scion for 18k and finance the entire amount (including tax) for 60 months at a rate of 6%. My state has a sales tax rate of 7%, so you're financing 18k plus another 1260 in tax. Once you drive that car off the lot, it's going to depreciate. Most people say a new car depreciates 20% just by being titled and driven off the lot but let's be generous and say it only declines 15% (from the purchase price of 18k). Your car is now worth 15,300 while you owe $19,260. Why would anyone pay you 19,260 for yours when they can get a brand new one for the same price? You are now 3,960 upside down. Had you put 2k down, you'd still be 1,960 upside down. After a year, your car will depreciate another 10% (so it's now worth 13,770) but your loan balance has only decreased to $15,859 so you are still $2,089 underwater. It's not until about the twenty-fourth month that you start to build any equity in the vehicle (i.e. It's worth more than you owe).
If you purchase a vehicle with nothing down, it's best to purchase a used one. You won't have the 20% depreciation by driving it off the lot. Your used car will still depreciate, but not as much as a new car would. The car may depreciate faster than loan balance will go down in the first year or so, but you wont be in nearly as bad shape as had you purchase a new car.
I work in the banking industry and I see this day in and day out... take it from me! We repo cars everyday from people who are 2, 3, or 4 grand upside down. It's not a good position to be in.
Chris
[#] Mar 19, 2008 01:09pm Orin
I disagree with almost everything you've said.
At what point is a car going to be worth more than you owe? If you put a huge down payment perhaps. You are putting cash into something that is always decreasing value, what is the point? It's not logical.
If your advice is so good I suggest you create your own post.
[#] Mar 19, 2008 01:37pm chrisblack2k1
- Window Washer
What is the point?? Well, at some point you have to pay the loan off whether you trade it in, sell it, or keep it for the term of the loan. It is possible to build equity in a vehicle. I thought that was the whole point of this thread, explaining being upside down and how to avoid it?
Chris
[#] Mar 19, 2008 03:17pm Orin
Putting your own money (thousands of dollars $$$ as a down payment) for the sake of having equity is not only illogical, it's just plain bad financing.
a smarter idea would be to write an extra payment to your lender and pay to principle only each month, then you can at least pay it off faster and save some money on interest charges.
[#] Mar 19, 2008 03:30pm chrisblack2k1
- Window Washer
I'm aware that the entire post is not about being upside down; however I was simply adding to that subject. Either way, I think we're in agreeance that if you do 100% financing and only make the minimum payment for the life of the loan, you will have negative equity in your vehicle for the majority of the loan term.
Lenders look more favorably on an application when the buyer is putting money down. If the customer is has something at stake in the vehicle (a down payment), they will be less likely to walk away from the loan. In today's credit climate, most scrupulous lenders are only giving 100% financing to the most credit-worthy customers (FICO > 700).
Chris
[#] Mar 19, 2008 04:26pm Orin
^agreed
[#] Mar 19, 2008 04:34pm
TOP: Home > Marketplace > Sale/Trade/Wanted > Trading A Car. What You Need To Know.
Administrator 
Audio Subject Matter Expert 
Auto Subject Matter Expert 
HID Subject Matter Expert 
LED Subject Matter Expert 
New User 
NOS Subject Matter Expert 
Photography Subject Matter Expert
©2008 Club Scion tC - Community for Scion tC enthusiasts.