Why is it said that you give your car away in trade?

Question

I have a 2004 Honda CRV with 39,000 miles. Should I expect to get a trade in credit (no liens on vehicle) of greater than 60 percent of its fair market value? I have never understood the concept that you "give' your car to the dealer. Due the tax laws of my residence you pay much lower sales tax on a trade than sell your car and then buy with cash. Any guidance would be helpful. Thanks.

Answer 1

just sell your car instead of trading it. you can get alot more money for it.

Answer 2

The dealer trade-in value and the private party sale value can be significantly different.  The dealer is going to low-ball you on the trade-in price because they want to make as much on the resale as possible.  Plus, they assume a risk of not being able to sell it, and have to sell it at auction.  The difference between the trade-in and private party value can be as much as $2000-$4000 depending on the vehicle. Selling it yourself will also give you more money to put down on the new vehicle.

Good luck.

Answer 3

2004 Honda CR-V 4 Dr EX AWD SUV  

Trade-In Private Party Dealer Retail

                                      Trade  Pvt Party  Dealer

National Base Price $12,839 $14,128 $15,182

Optional Equipment $343 $385 $465

4-Speed Automatic Transmission $343 $385 $465

Color Adjustment

White $31 $34 $36

Regional Adjustment

for Zip Code 33780 $-39 $-43 $-47

Mileage Adjustment

39,000 miles $739 $739 $739

Condition Adjustment

Clean $0 $0 $0

           Trade-in      Priv-Prty      Dealer-Retail

Total   $13,913     $15,243         $16,375



    

Certified Used Vehicle $17,767



I had to guess at color and transmission but this should give you a true market value of your vehicle, for whatever reason the text doesn't line up like it did on my screen...

Go to www.edmunds.com to appraise your car, they are most accurate unlike NADA which tends to overvalue cars..

Answer 4

When you go to buy a car, the price on it isn't what you will pay, they will knock some off, when you do a trade in, they still knock some off, but part of what they knock off is what they would have knocked off  without a trade.  So you get ripped of on the amount of the trade in.   Try this.  Go try and make a deal on the car you want without a trade in.  See what the best deal is.  Then go back or to another dealer and do the same deal with the trade in.  Then you will know exactly how much they are giving you for your car!  A dealer won't pay as much as an individual will, because the car lot has to make some on selling it to someone else!  Good Luck!

Answer 5

baracuda is wrong in his statement.  You would pay tax on it.  Heres how it works.  You buy a car for $20,000 and trade a car for $10000, you only pay tax on the difference since you paid tax on the trade when you bought it (as long as its the same state you bought your trade in)  if you sell it your selff and use the money as a down payment, you will pay tax on $20000.  You need to figure how much you can sell it for yourself and see if you get more than the trade amount plus the tax credit.  Youd be supprised how hard and long it takes to sell a car your self, lucky for you you have a high demand vehicle.  Good luck

Answer 6

That is a business term derived from cost opportunity. When you trade in your car, you are giving up the opportunity to sell your car on lets say eBay, or craigs list  and get a price you wanted for it, while the dealer will give you what they appraise it for minus dealers other fees.

in lamens term it means you can always get more for you car if you spend the energy and time to sell it for yourself.

Answer 7

If you sell your car, why would YOU pay taxes, the buyer would pay the taxes, unless theres something really really different in your state. The dealer will give you a bad deal in trade, always, only trade a car you are desperate to get rid of, otherwise sell it to an individual, and you shouldn't be paying taxes when you sell, only the buyer