What is my vehicle worth as a trade-in?
A Wheels reader recently emailed me a question about trade-in values, so I’d like to devote today’s column to addressing this topic.
The question is: Why can’t I get the same trade-in amount for my current vehicle as what I see similar models advertised for?
The following does not apply to leased vehicles.
Some customers are disappointed with the lower-than-expected value of their trade-in and wonder how the dealer came up with that amount. Let me reassure you that dealers don’t choose trade-in figures out of thin air.
Before customers visit a dealership, they conduct research to determine how much they should ask for their current vehicle as a trade-in. They start by finding similar vehicles to theirs being advertised for sale.
If you take the average retail asking price for similar vehicles to yours (year, make, model and kilometres) as a starting point and then subtract the following items, you should arrive at an approximate trade-in value for your vehicle. 1. Deduct an amount for a discount/ negotiated price reduction; 2. Deduct the cost of reconditioning (advertised vehicles are usually fully reconditioned — these costs can exceed $2,000); 3. Deduct an amount for a dealer profit margin upon the resale of that vehicle; 4. Deduct an amount for depreciation due to any accidents/insurance claims on the vehicle.
If you were choosing to buy one of two virtually identical vehicles and one was accident-free, would you expect to pay less for the one that had an accident? The answer is yes.
To get the highest amount for your trade-in, you should sell it privately. This involves organizing the advertisements (and paying any fees, if applicable), meeting with potential buyers, ensuring that you provide the proper documentation and declarations, negotiating a selling price and arranging for payment.
There are three advantages to trading in a vehicle to a registered new car dealership. First, it’s quick and hassle-free. Here, you simply get the vehicle appraised and hand it over when it’s time to pick up your new vehicle.
Secondly, you only pay HST on the net difference between the selling price of the vehicle you are purchasing and the trade-in value.
Thirdly, you don’t have to spend time and money preparing the vehicle for sale and trying to find a buyer.
For those who plan on trading in their vehicles to a dealership, here are some dos and don’ts that will help to prepare you. Do: Check classified ad listings and specialty publications to find out the approximate retail value on your make and model. Note: The asking price is never the selling price. Do: Declare any outstanding liens or loans on the vehicle before offering it to a dealership. Do: Provide the service and body history of your vehicle and any mechanical and/or structural issues that may affect its value. Do: Let the dealer know if something material has happened to the trade-in between the time of appraisal and turning it in to the dealership (i.e., windshield or body damage). Don’t: Alter or remove any equipment or features on your trade-in after it has been appraised. The amount you received is based on what was appraised. Altering it may mean that you will end up having you pay for the items removed or altered. Don’t: Hide any material informa- tion about your vehicle’s present and past. This is unethical and it may cost you money. You will have to sign a declaration verifying all the information you provided, making you legally liable if it is false. Don’t: Be unrealistic. Understand that the retail value and the appraised value of your vehicle will be different — sometimes to the tune of thousands of dollars. This column represents the views and values of the TADA. Write to president@tada.ca or go to tada.ca. Bob Redinger is president of the Trillium Automobile Dealers Association and is a new-car dealer in the GTA.