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Trade in Values tanking

TheRaven

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Understood. There are some people here, however, that were saying that it's always better to sell it yourself. And, of course, not realizing that there can be tax savings by considering alternatives.
Yes, it generally only works if you are able to trade your vehicle in on the same brand vehicle. It gives you a lot more dealers to choose from, and dealers will usually offer a bit more for a vehicle that fits their lot plan. I was trading my Challenger in on a Cadillac so what I needed to find was a suitable Cadillac that happened to be on a Dodge lot...and that's not something that exists...um...at all.
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chicknwaffles

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Yes, it generally only works if you are able to trade your vehicle in on the same brand vehicle. It gives you a lot more dealers to choose from, and dealers will usually offer a bit more for a vehicle that fits their lot plan. I was trading my Challenger in on a Cadillac so what I needed to find was a suitable Cadillac that happened to be on a Dodge lot...and that's not something that exists...um...at all.
dealers always have the option of keeping them on the lot or sending them to auction. so same brand is not typically a gigantic consideration
 

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The problem is, no dealer is going to give you that $40k on a trade, even if you just took it off the lot the day before and the sticker is still in the window. No dealer would give you "fair market value" on a trade, they'll usually give you the "loan value" or less, and any discount, rebate, etc. you get off MSRP doesn't count when taxes are calculated, here or any other State I know of. There's no financial guide I've ever read that says you're better off trading in vs selling your car yourself, the gap in actual sales tax cash vs trade is quite small.







When I worked in retail sales the F&L people did everything to dissuade a customer from making a cash buy. Dealer grosses depend upon lowballed trades, high grossed new vehicles, F&I and accessory sales. Read up on four square deals:







https://www.consumerreports.org/con...ff-with-the-four-square-heres-how-to-beat-it/
Man you have been getting bad deal.
 

TheRaven

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dealers always have the option of keeping them on the lot or sending them to auction. so same brand is not typically a gigantic consideration
Agreed - how much money they can make off of said trade is the ONLY gigantic consideration. But they are more likely to keep the vehicle if it is a house brand because they generally ask more for their house brand thanks to being able to package in add-ons. So I suppose you could say it's a small consideration...just big enough to make a difference in what they offer you.
 

chicknwaffles

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Agreed - how much money they can make off of said trade is the ONLY gigantic consideration. But they are more likely to keep the vehicle if it is a house brand because they generally ask more for their house brand thanks to being able to package in add-ons. So I suppose you could say it's a small consideration...just big enough to make a difference in what they offer you.
I think the opposite is true.

They can keep it or send it to auction, but they don't really give a damn which, it's whatever makes them the most money.

I find it funny anyone would suggest that the same brand would pay more.

I actually think the them paying you LESS, not more would make them want to perhaps keep it on their lot. Because they already screwed you so hard the margin is huge.
 

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That would be rare in most cases. Could you cite a State where the tax (?) would make trading in preferable? Sales taxes are paid by the buyer.
There have been several replies addressing the above already. But as stated in many states you only pay sales tax on the difference between the trade-in value and new car price. In our state that is only applicable if purchasing a new vehicle and not a used one on the lot.
Just for example I ran trade-in vs. private sale estimates for a 2019 JL Rubicon.
Trade in value = $37,181
Private Sale value = $39,419
Difference = $2,238
However the sales tax is 5.75% here so you "save" $2,138 in sales tax if you trade it in. So if you take into account what KBB states you are only netting $100 if you sell your used vehicle yourself...and what is your time worth? Some states have higher sales tax (a quick Google search shows California at 7.25%....and that would be almost $2,700 if the same rules apply).
I know, I know, you can say that is KBB and not accurate but from experience on purchasing vehicles from dealers they are usually in the same ballpark. Why? Well because dealers know that a lot of people refer to KBB or other easily accessible or free sites. The last several vehicles I bought at a dealership they pulled up KBB, NADA, Edmunds, etc... reports.
 

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I think the opposite is true.

They can keep it or send it to auction, but they don't really give a damn which, it's whatever makes them the most money.

I find it funny anyone would suggest that the same brand would pay more.

I actually think the them paying you LESS, not more would make them want to perhaps keep it on their lot. Because they already screwed you so hard the margin is huge.
While the scenario you describe here certainly occurs, it is a fact that you have a better chance at a better trade offer from a dealer of the brand you are trading. And the reasons are what I called out above plus a few more. Every automaker has their "certified pre-owned" program, and dealers can only certify their own brand vehicles....but once they do the price goes up $2-3k. They can also accessorize the vehicle with "authorized" add-ons and still maintain factory warranty coverage. It is becoming increasingly popular for automakers to have pre-owned search engines on their websites, and those search engines only cover their own dealers - this massively increases the visibility of same-brand used vehicles. Finally, there is the psychological affect that makes people willing to pay more for a used vehicle from a same-brand lot.

It's why I was continually told "you should definitely try a Dodge dealership" while calling around for trade offers from Cadillac dealers for my Challenger.
 

TheRaven

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Just for example I ran trade-in vs. private sale estimates for a 2019 JL Rubicon.
Trade in value = $37,181
Private Sale value = $39,419
Difference = $2,238
However the sales tax is 5.75% here so you "save" $2,138 in sales tax if you trade it in. So if you take into account what KBB states you are only netting $100 if you sell your used vehicle yourself...and what is your time worth?
While your math is accurate - the problem is that in reality you aren't going to get anywhere near that $37k KBB quote. It's going to be at least $2k less....even the "instant Cash Offer" that is one button away on KBB's site will reflect that. Like I said in a previous post KBB said my Challenger was worth $41k and the best dealer offer I got was $38k - and that was an outlier. The median was $35k.

The overriding point here is that the tax savings are a real thing, however actually being able to trade a vehicle in and have the tax savings be close to as good or better than the money you'd make selling privately is pretty rare. The equation does change however as you move up the cost scale. Get to $100k+ vehicles and you are going to be much more likely to make out on those tax savings - though even up there there can be problems cause some states cap how much you can save.
 

chicknwaffles

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While the scenario you describe here certainly occurs, it is a fact that you have a better chance at a better trade offer from a dealer of the brand you are trading. And the reasons are what I called out above plus a few more. Every automaker has their "certified pre-owned" program, and dealers can only certify their own brand vehicles....but once they do the price goes up $2-3k. They can also accessorize the vehicle with "authorized" add-ons and still maintain factory warranty coverage. It is becoming increasingly popular for automakers to have pre-owned search engines on their websites, and those search engines only cover their own dealers - this massively increases the visibility of same-brand used vehicles. Finally, there is the psychological affect that makes people willing to pay more for a used vehicle from a same-brand lot.

It's why I was continually told "you should definitely try a Dodge dealership" while calling around for trade offers from Cadillac dealers for my Challenger.
While the scenario you describe here certainly occurs, it is a fact that dealer don't care at all what the brand is and will go whichever way makes the most money.

waffles out.
 

chicknwaffles

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While your math is accurate - the problem is that in reality you aren't going to get anywhere near that $37k KBB quote. It's going to be at least $2k less....even the "instant Cash Offer" that is one button away on KBB's site will reflect that. Like I said in a previous post KBB said my Challenger was worth $41k and the best dealer offer I got was $38k - and that was an outlier. The median was $35k.

The overriding point here is that the tax savings are a real thing, however actually being able to trade a vehicle in and have the tax savings be close to as good or better than the money you'd make selling privately is pretty rare. The equation does change however as you move up the cost scale. Get to $100k+ vehicles and you are going to be much more likely to make out on those tax savings - though even up there there can be problems cause some states cap how much you can save.
I just did exactly that. Is it rare? I guess. The price was very close to what I was asking (and getting no real offers in a month privately, on two major websites).

The real answer is it varies.

Each car purchase and sale is it's own beast and must be dealt with by itself. What may have worked last sale or purchase may not work this time.
 

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TheRaven

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I just did exactly that. Is it rare? I guess. The price was very close to what I was asking (and getting no real offers in a month privately, on two major websites).
This is why I said that it's pretty rare. It certainly happens. But one should expect this to not work, and that expectation will pan out to be true much more often than not true.
 

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Wrangler is popular at any dealer, so was my 4Runner. They could careless what cars they sold new.
 

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Wrangler is popular at any dealer, so was my 4Runner. They could careless what cars they sold new.
This is true in the greater Chicago area at present. I'm hunting for a small SUV for my daughter and literally get mobbed by sales people and "managers" everywhere I went with my 4xe Rubi with them claiming "What's your payment? We'll buy you out of your lease or loan!" Funniest thing, other than seeing grown adults not understand what "No, thank you" means, was their befuddled look when I told them I owned it free and clear and don't do "monthly payments". Nobody was interested in selling a new vehicle without a trade or lease turn in. Very odd.
 

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While your math is accurate - the problem is that in reality you aren't going to get anywhere near that $37k KBB quote. It's going to be at least $2k less....even the "instant Cash Offer" that is one button away on KBB's site will reflect that. Like I said in a previous post KBB said my Challenger was worth $41k and the best dealer offer I got was $38k - and that was an outlier. The median was $35k.

The overriding point here is that the tax savings are a real thing, however actually being able to trade a vehicle in and have the tax savings be close to as good or better than the money you'd make selling privately is pretty rare. The equation does change however as you move up the cost scale. Get to $100k+ vehicles and you are going to be much more likely to make out on those tax savings - though even up there there can be problems cause some states cap how much you can save.
Everybody has different experiences with this and I'm definitely not saying you are wrong. Just from my own personal experience (both on my own vehicles and helping out several friends or family members when buying new or used vehicles from a dealership) both the trade-in values and the vehicles they were selling had comparable prices to what many search engines and other websites had listed. Granted they will always start out with offering you less for the trade-in and more for the vehicle you want to buy but some quick negotiations usually brings the offers within reason....and if not I just walk out. The biggest thing you need to keep in mind that the condition of the vehicle they want to trade-in makes a difference, and everybody thinks that THEIR vehicle should be in the 100% perfect and excellent shape category. The difference between "excellent" and "good" condition trade-in can be thousands of dollars. The reason friends and family often ask me to check out a vehicle on the lot, especially a used on for sale, is that I'm a "car guy" and can identify a lot of potential issues and determine the overall condition of the car by inspecting it and a test drive (I don't claim to be an ASE certified mechanic but worked in the automotive engineering and testing field for years and car have been a hobby since I was a kid). I can't count how many times people I know think their car is "excellent" but I have to tell them it's really not.

I will also say that most of my experience was all pre-Covid so things may have changed, though I have been involved in the purchase of 2 vehicles since.
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