So you’re buying a car with bad credit? You probably have a trade-in. Here are some sensible tips on how to get the most for your trade-in at a car dealership, coming from years of experience in the car business and also a behind the scenes look at how car dealers determine trade-in values. Hang with me for a few minutes and I’m going to give you a behind the scenes look at how car dealers typically go about valuing a vehicle, and what YOU can do to get the most favorable amount for your trade.

How Dealers Value Used Car Trade-Ins

If you’ve followed along with the common sales process at a dealership, after you’ve taken the vehicle of your choice for a test drive, you’re invited into the dealership to discuss figures. You’ll be asked for the keys to your trade-in and the salesman will usually go write down the VIN (Vehicle Identification Number), year model, trim package and mileage of your trade to be presented along with your car keys to used car manager.

The used car sales manager will then take a look at your vehicle, possibly take it for a drive and evaluate it’s condition. Here are the key points that the manager will be looking at when evaluating your trade:

• Paint condition and color
• Interior trim and upholstery
• Remaining tire tread and matching tires
• Aftermarket vs Original rims
• Carpeting
• Interior smell
• Engine cleanliness
• Signs of engine/transmission leaks
• Windshield rock chips

With these key factors evaluated, the used car sales manager is going to take a look at your vehicle’s value using one of three resources:

• NADA used car value guide
• Kelly Blue Book used car value guide
• Black Book value

Most commonly, when the manager references one of these guides, they will usually choose between average and poor condition in the book and subtract for any excess mileage called a “mileage deduct”. Usually aftermarket additions will not increase the vehicle’s value according to the manager with the exception of truck tool boxes or camper tops. If you’ve added any aftermarket CD players, aftermarket rims or other common additions, they usually won’t count for anything. The manager will also deduct for reconditioning expenses and any cosmetic repairs that are going to be made to the vehicle, if they are planning to “retail” the vehicle on the lot. If it’s going to be considered a “wholesale piece”, then they usually won’t do any repairs.

Common reconditioning costs that the dealer will deduct for:

• Headlight yellowing removal
• Upholstery repair (cigarette burns, rips, etc)
• Paint buffing, touch up and polishing
• New tires
• Body damage repair
• Cleaning, deodorizing, detailing
• Windshield rock chip repair

Once all of these factors are taken into consideration and deductions are made from the “book value”, then the dealer will contemplate marketability. Is this a vehicle that is in demand that a premium price can be had for it and quickly sold, or is this vehicle a “sled” that will sit on the lot indefinitely. Discretionary adjustments to the vehicle’s “actual cash value” will be made and a final value determined. As managers do this multiple times a day, everyday they’re at work it usually only takes about 10 to 15 minutes to arrive at a number, known as the “actual cash value”.

Something to keep in mind is that when you’re presented with an amount for your trade in, it’s usually a “trade allowance”, which is either more than or less than the “actual cash value” of the vehicle that the dealer is willing to pay for your trade in.

Let me explain…

If the dealer offers you MORE for your trade in than the actual cash value, then they are actually inflating the retail sale price of the vehicle that you’re buying to “show” you more for your trade.

OR

If the dealer is offering you LESS for your trade in than the actual cash value, then they are actually trying to add more profit to the deal. If you take $1,000.00 less for your trade in than the “actual cash value” of it, then they’ve added another $1,000.00 to the profit on your car purchase.

How do you know if you’re being offered a fair price for your vehicle? Simply by referencing one of the guides listed above that they use so that you know in advance. Unfortunately, the “Black Book” value won’t be something that you’ll have access to and usually only the sales managers (not the car salesmen) have access to these guides.

So now that you have a good idea of how dealers arrive at your trade-in value, let’s move on.

How to Get the Most for Your Trade-In

Thoroughly clean your vehicle. This is so simple yet after having seen thousands of trade-in’s the number one thing that makes a great impression about your vehicle is a clean vehicle inside and out. Either pay someone or do it yourself. Have the vehicle washed, waxed, the interior upholstery shampooed, and also have the engine compartment and trunk thoroughly cleaned. This helps to make a great impression and show that the vehicle has been cared for, allowing the dealer to put more confidence in your vehicle being easily resold.

Have any paint chips or minor body work repaired. If there is noticeable scratch on the paint or a loose trim piece hanging on, have a car detailing service make those small repairs. It’s usually inexpensive to have this type of touch up work performed, and once again when there are no noticeable blemishes such as this, the dealer will have more confidence to put more money into your trade.

Have any small dents repaired by a PDR specialist (Paintless Dent Removal). Those little pings can be taken out easily by an experienced PDR technician and they usually charge by body panel, not by ding/dent.

Have gas in the vehicle! Nothing is more nerve wracking for a used car manager than taking a test drive in an unknown vehicle having to worry that they’ll not have enough gas to get back to the dealership.

Have a fresh oil change. You don’t want the dealer to pull the dipstick out and think that you don’t have the oil changed on a regular basis. The thought on this is that if the vehicle hasn’t been well maintained, then it’s a potential risk when reselling to another customer that can cause customer service headaches if there is a major mechanical breakdown after it is resold. Contrary to popular belief, dealers do not want to sell a used car that will have mechanical problems as that is a fast way to ruin their reputation among the public.

Have service records. Having a written date record (small notepad is sufficient) showing the dates and services performed on the vehicle is great. By providing the dealer with these records, they’ll be able to show the new buyer of your vehicle that oil changes, transmission services and tire replacements were performed, and when. This is something that 99.9% of customers never bring to the dealership when trading their vehicle and it makes a difference.

It does take effort if you’re serious about getting the most for your trade-in. By doing these simple things, you help with the presentation and valuation of your trade-in. By having the vehicle in a condition to where it will need little cleaning and reconditioning, the dealer will better be able to be confident about your vehicle.  We hope this information has been useful and hope that you are able to save more money on your next car purchase. Thank you for reading!