The Insider’s Guide To Getting The Most For Your Used CarJun 23rd, 2020
The Insider’s Guide To Getting The Most For Your Used Car
We all want to maximize the money in our pockets. Follow these simple tips to getting the most for your used car. As the second biggest purchase you'll probably ever make, you want to recoup every penny you can. And getting it right can mean a difference of hundreds of dollars.
You have three options: sell privately, sell to a dealership, or trade in your old vehicle at a dealership against the purchase price of your new ride.
You might think selling privately is the best way to get the most money for your old vehicle. But it's not necessarily the case. Here's why.
Why Trade in your vehicle at a dealership?
We already know that trading your vehicle in at a dealership is the least stressful, and hassle-free way of selling your vehicle. It's much easier than selling privately. But let's take a closer look.
The average used car takes 60-90 days to sell on kijiji, autotrader or other similar online selling sites. Most people simply aren’t prepared to wait that long.
Plus, when you trade in at a dealership you also don't need to worry about a parade of strangers visiting your home or a whole host of other issues. Does your insurance cover a solo test-drive? Who's liable when the potential buyer takes your car for an inspection at the shop? What do you do if the buyer asks for a reduced price on the bill of sale so they can save on taxes? How to you properly transfer ownership? Plus there's all the potential transfer of money hassles too.
COVID-19 Considerations. Times are different. There are so many things that can go wrong, especially during the pandemic. The test-drive alone should be a point of worry - you either need to sit in an enclosed vehicle with your potential buyer, or hope that your insurance covers him/her in the case of an accident. Safety and sanitization should be your number one concerns, and it's truly a difficult hurdle to get right in 2020.
So How Exactly Can I Maximize My Money?
If you follow these tips, you can probably get as much or more by trading your vehicle, plus you'll skip the potential pain involved in a private transaction.
1. TAX CREDIT
This is probably the most compelling reason to trade your vehicle in rather than trying to sell it privately. Did you know, the trade-in tax credit usually offsets all or most of the additional trade value you may have gotten by selling it privately? Let's take a closer look.
What is a tax credit? As an example, you have negotiated a price of $15,000 for your trade-in on a $28,000 vehicle you intend to purchase. Instead of paying tax on the full amount of the vehicle ($28,000), you'll only pay the tax for the price difference between your old and new vehicle (in this case $13,000). On more expensive vehicle purchases this can save you thousands of dollars. Here is how the math works:
Price of car that you are buying: $28,000
Trade-in value: $15,000
Net Taxable: $13,000
Tax without trade (based on 12% PST/GST): $3360
Tax with trade-in credit (12% on Net only): $1560
So, you are effectively saving an additional $1800 by trading your vehicle in!
Look online at popular vehicle websites to determine what others are asking for vehicles similar to yours. Trader.ca, Kijiji.ca, and usedvictoria.ca are some of the most popular local sites. But remember that these are asking prices, not necessarily transaction prices. And in the case of dealership pricing, the price reflects an thoroughly inspected and reconditioned vehicle. The dealership price typically reflects reconditioning, the dealership’s cost of marketing and selling the vehicle, and profit. You can also go online and look at a used vehicle value calculator like Canadian Black Book.
If you are someone who consistently takes good care of your vehicle and performs recommended maintenance on schedule, the easiest way to add value is simply providing full-service records for the vehicle. This includes oil and other fluid changes, tire rotations and alignments, engine repairs, and any cosmetic damage that you have fixed from dents and dings to body repairs. This shows the dealer that your vehicle will have a lower reconditioning cost and can lead to a better trade-in value.
4. BUY-IN, NOT TRADE-IN
Looking for an honest value for your vehicle? Offer your vehicle as a buy-in rather than a trade-in. A buy-in is the valuation for you selling your vehicle without buying one in return from the dealer. This forces the dealer to give you an honest assessment and offer for your vehicle, without the ability to inflate the trade-in price with money from the car you are purchasing. You still have the ability to tell the dealer you wish to buy a car from them after the terms of the buy-in have been agreed upon. This will give you the best honest valuation for your vehicle.
At KIA Victoria, At KIA Victoria, we are transparent, open, and honest. We provide an itemized written offer of your trade-in value, detailing exactly how we came to that number. The offer for your trade-in will be the same whether you buy a car from us or not: we’ll buy your car, even if you don't buy ours. The price won’t change. Even if you just need to sell your car, we’re happy to buy it from you. Bring your car to Kia Victoria today to get started.
5. SHOP AROUND
Shopping an offer you get from a dealership is a great way to validate if you have a good deal or not. Some dealerships will pay much more for a vehicle that is their brand. Similarly, dealers who have successful used car departments are always looking for additional vehicles to quickly sell and will pay aggressively if it's a popular vehicle. You can also use an offer to try to leverage more money from a different dealership. Make sure to get any offers in writing.
6. SPRING FLING OR WINTER RIDE?
Plan your trade-in for the time of year that maximizes your trade value. The season will impact market conditions and can either positively or negatively affect your value. For example, an all-wheel-drive vehicle is more desirable going into winter, while a convertible is much more appealing in the spring and early summer. In general, there is a spring selling season where dealerships will start to increase their used inventory in anticipation of increased demand. This is also one of the best times to maximize your trade value as dealers are generally paying more for trade-ins. Pay attention to the season and you can increase your trade value.
7. Smart Investments to Increase Trade Value
Look after any minor cosmetic shortcomings. Small scratches, dings, and dents are OK and something that the dealership can repair inexpensively. However, if your vehicle has accident damage that is covered by an insurance claim, get the vehicle repaired before trading it in or getting it appraised.
Detail and clean the vehicle yourself. We don’t recommend paying a professional, as this can get quite expensive. However, a thorough clean and wash will show that you take great care of your car and will positively influence how the dealer views and values your vehicle. Don’t forget to clean the engine area with a cloth and cleaning product to make your vehicle really stand out (as most people overlook this while cleaning).
Take care of small mechanical issues. If you have an engine light, the brakes are squeaking, or if there are any other obvious mechanical defects, appraisers are trained to assume the worst and will lower their offer accordingly. Having a vehicle with no immediate or obvious problems gives the seller more leverage as the dealer will not be able to negotiate the offer down based on imperfections.
To Sum It Up
And that's it! Our insider's guide to maximizing your trade-in value. If you follow our tips above, do your research, and prepare your vehicle in advance, you can ensure that you get the maximum value for your trade-in.
But, hey, we need to brag a bit right now. At KIA Victoria, we just do things differently around here. As one of the only family-owned dealerships left in Victoria, we value trust and honesty above all else. We're not just business owners - we live here with our families too.
Here's our philosophy: The Right Vehicle, The Right Way, For Everyone.