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Bobby Lubbers
Bobby Lubbers is owner of Bobby Lubbers Auto Group, a Chevrolet, Pontiac, Dodge, Chrysler, and Jeep dealership in Harper, KS. A graduate of Wichita State University, he has been in and around the automotive industry for more than 25 years, and has been nationally recognized by General Motors for exceptional sales and customer satisfaction. You may contact Bobby by phone at (316) 721-1545, or by email at bobby@bobbylubbers.com
Cars, Trucks, Vans & Automotive
2003-02-01 12:11:00
Trade-in value
:  Why is there such a big difference in what I can get for my trade-in at different car dealerships?  How do they arrive at the right price for my trade-in, and why is it different than what I find in the 'book'?
ANSWER:  This is a very good question, and one that I hear on a regular basis. There are a number of valuation services on the market today such as NADA, Kelly Blue Book, and Edmunds, and each will give you a different value for a vehicle. More often than not, the reliability of these numbers will depend on whether you are buying or selling. Let's put aside the different valuation methods for a moment and talk about the sales process at automobile dealerships. This will provide valuable insight into your trade value.Let's say you are shopping for a new truck and would like to trade-in your current vehicle. Being a wise and prudent buyer you have decided to compare prices between two dealerships, we'll call them Hometown Motors and ABC Motors. At Hometown Motors you find the truck you want and the dealer prices you this new truck for $25,000 and lists a value for your trade of $10,000, leaving a difference of $15,000. At this point you are pleased with the value of your trade but would like to find a lower price on the truck you are buying. At ABC Motors you find the same truck and the dealer will sell it to you for $22,000 but you can only get $8,000 for your trade leaving a difference of $14,000. Here you found the truck at the price you wanted but why is the trade-in not worth the same amount? Who is giving you the better deal?To find out who has the better deal, look at the trade difference. In the example, Hometown Motors had a difference of $15,000 and ABC Cars had a difference of $14,000. This means you give them your car and the cash, so even though ABC Cars is giving you $2,000 less for your trade they are making you the better deal on the new truck by $1,000. Too often, people get caught up in the different values for their trade-in and forget what is really important in the purchase of a new vehicle… THE NET COST. Car dealers can show many different prices for your trade by simply raising or lowering the price of the vehicle you are buying. If you want to know what the best deal always is… look at what it's going to cost you in cash to do the deal… and not at what a particular dealer might or might not give for your trade.  How does the dealer arrive at the value for your trade-in? Why is it different from the values you have found in NADA or even Kelly Blue Book? The majority of new car dealers use what is known as the 'Black Book'. This publication is released weekly and is a composite average of what vehicles are bringing at the program sales and auctions. In other words a dealer looks in the 'Black Book' to see what he could buy a vehicle just like yours for at the auction or program sale.  He makes adjustments for condition, mileage, and appearance. While these figures are often different from what you have found in your research, it is important to remember that the values a dealer uses from the ‘Black Book’ reflect current market conditions and weekly fluctuations versus monthly or quarterly publications, which are most often 2 to 3 months behind the market. Monthly publications such as NADA and Kelly Blue Book have little value other than providing retail prices for vehicles. NADA is used primarily by lenders to provide financing for vehicles, and many retailers use Kelly Blue Book because it provides inflated retail figures and often times undervalued trade values.  You should know that both of these publications were chartered or printed by automobile dealer associations to help them sell cars.Finally, the face of the automotive industry is changing rapidly, and you probably won't find many cigar- chomping car salesmen in polyester suits, but there are still plenty of traps you can fall into if you are not careful. The best advice is to do your homework and not get caught up in the values you will see thrown at you.  Shop and compare… and remember… the secret to your best deal lies in the trade difference. Buy where you get the lowest difference.  That will always be your best deal.
 
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