What a dealer won't tell you about your used car
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However, some dealers have a different way of finding the used car trade in value. Just like buying a new car, trading in a used car requires research to ensure that you are getting a great deal. Here are three different trade-in scenarios and what you should do in each situation.
Scenario One
Let's say your trading in your Nissan at a Chevrolet dealership. The used car manager (the person who usually deals with trade-ins) may call the local Nissan dealer and ask if they would be interested in your Nissan to sell on their used car lot.
The Nissan dealer offers to pay the Chevy dealer $5000 for it. The Chevrolet dealer will then offer you $4600 for it, and make an extra $400.00 on the transaction. This provides you with an opportunity to negotiate as you know they are getting more for the vehicle than they're offering you. To a dealer, it's easy money.
Scenario Two
This time you are trading in your Nissan at the Nissan dealer. The Nissan dealer wants to sell it on their used car lot. You're offered $5000 for it because the dealer doesn't need to sell it to another dealership. In this situation, you have a little bit more room to negotiate because you know the dealer will be selling it on their own lot.
If they have any models like yours on the used car lot (similar condition and mileage) check how much they are selling it for. You'll know their margin of profit by taking how much they offered you ($5000) and subtracting it from how much they are asking on the similar model on their used car lot. They'll say it's more complicated than that but it really isn't. With that, you'll be able to negotiate a higher used car trade-in value.
Scenario Three
Now this time you go into another Nissan dealership with the same car and they offer you $6000 for it. "Wow" you say to yourself "that other dealer was trying to cheat me". Well, not really. Some car dealers will offer you an artificially high used car trade in value knowing that they can make up the loss on the new car transaction. They may not negotiate as good of a price on the new car as the other dealers. So in the end, you still be paying the same. You'll get more for the trade, but the new car price will also be higher.
Dealers do this because many customers only think about the used car trade in value, not about the new car price because they think all dealers sell new cars for about the same price. A great way to determine if a dealer is trying to fool you with an artificially high used car trade in value is by asking if they'll write you a cheque for that amount without you buying a new car from them. They won't write you check because they'll lose money.
Conclusions
Always negotiate the new car price before you tell them you have a trade. Only mention that you'll be trading in a vehicle as you get closer to signing the deal. They'll ask you earlier but just say no and move on. The earlier a salesperson knows, the easier it is for them to make it look like your getting a great deal even if you aren't.
Overall, the best way to get the best price for your trade is to know the used car trade in value. Check local newspapers and the internet to see how much people are selling the car for privately. You'll get more money (often a lot more money) selling your car privately. It can take time and effort so it's up to you to determine if you feel comfortable selling your car yourself. If getting the absolute best price for your car is your objective, sell it privately.