How does trading in a car for a new one work?

Question

...to be more specific. say the dealer offers me 10k for my trade in and price of the car i'm looking at is 18k, does the dealer deduct the 10k from the 18k and i only finance 8k??? i understand that any balance i may have on a trade in is carried over into the new loan.

Answer 1

Here's a strategy that Worked the best for me over time. First off determine what new car you want to buy along with a list of options that you want. Find out the invoice price of the car from say cars.com or a TMV from Edmund's.

Next approach several dealers in your area for that car. NEVER disclose the fact that you want to trade.  Show them the invoice price from cars.com or the TMV. Make sure to ask for out the door/on the road price including Tax Title Registration. (That's how you discover Surprises called Doc Fees.)

Tell them to beat the Numbers from cars.com. You can even set them off against each other by showing the price of one to the other. Be careful this can and does backfire.  Also make sure you compare the prices for the same configuration. For Ex. if one Dealer asks $500 more 'cause his model comes with Cruise/Sunroof etc, then deduct $500 from his price before comparing.

Once you identified the Dealer with lowest price. Go in person and iron out Final out the door price one more time. This time lean on him for every Item that gets added to the invoice price. You will be surprised to discover how whiny they can be. You must be a hard nosed SOB to deal with it. After all that, tell him you have a trade. *No dealer how big Poker player he is, can't hide his disappointment on that!)

Make sure you get a fair price on your trade in. Use KBB as a ballpark but not as upper limit.

NEVER as in NEVER EVER had over the keys to the Trade in. Insist on accompanying while they take test Drive. Pocket the keys after they are done driving. You can hand them back once you got the price you wanted.

An altogether approach is to go through carsdirect.com and selling the Trade on your own or to the dealer from whom they got the car.

Answer 2

Before you walk into a dealership, go to one of the websites below to find out what the Trade-In value for your car is....be honest about the condition.  That should be the amount you expect to get for your car from a dealership.  Make sure you have your title handy so the trade-in process will go smoothly.

When you walk into a dealership and start talking prices.  Never mention that you are going to trade-in a car up front.  Just say, "I may be considering it".  This way, they can't mess around with the final numbers before you agree on a final price for the new car.   Once that's negotiated and agreed upon, then you bring up the fact that you would like to get your car appraised for a trade-in.  Let their appraiser look at your car and give you an amount.  If it's acceptable to you and the salesperson, then you're good to go.  The value of your car will be deducted from the price of the new car.  You will only have to pay tax on the difference that between your trade-in and the new car...not the full price of the new car.