How does an auto deposit work?
(iSeeCars) – You are just starting to buy a car. Which probably means you’re asking yourself that eternal question: what should I do with my used car? Sell or trade?
Both have advantages. If you have an exceptionally clean vehicle that has well over the normal number of miles, you should try to sell the car yourself as high mileage will work against trade-in value at a dealer. Conversely, if your current car is on the junk side, you might find a buyer who doesn’t care as much as a new car dealer.
But then you would go through the hassle of getting your used car on the market and dealing with car buyers who may or may not have genuine interest in buying. It’s getting easier and easier to trade in your old car, but you still need to do some preparation to ensure you get the highest trade-in value. You may also consider selling your car to CarMax or Carvana as they will quickly assess the value of your used car and offer a purchase price. The money they provide you with can help you eliminate any loan balances you may have on your current car and, ideally, give you a full down payment on your new car.
Determining the value of your car
The process of trading in your car starts with determining how much your car is worth. First, take a good look at your vehicle and eliminate any personal feelings, positive or negative, that may have arisen over the years. Is it too small? Not for someone who needs a small car. Too large? Someone needs that carrying capacity. Too thirsty? matter of opinion. The wrong color? See “too thirsty.” None of these are legitimate factors in relation to trade-in value.
Factors that are legitimate: How many miles? The lower the better. how clean is it It should be as clean as possible, or if it isn’t, have it professionally detailed – never attempt to trade in or sell to a private party a vehicle that needs a bath, a vacuum, or has crowded ashtrays. You’d be surprised how many people ignore this advice and pay for it with a reduced trade-in value on their current car.
So what condition is your old car in? Be honest. The fact that your third child was born in the back seat may have great sentimental value, but it doesn’t add value to the car. You must be clinical in evaluating your trade-in. And don’t take it personally when a salesman test drives your car and tells you everything that’s wrong with it. He or she may set you up to take less than it’s worth, but once you’ve done your research, stand your ground.
Several websites, including Edmunds (Edmunds.com) and Kelley Blue Book (kbb.com), have appraisal tools that you can use to get a rough estimate of the value of your car. Again, be honest – you might be able to miss some small tears in the upholstery, but a buyer or dealer won’t. Some appraisal tools offer an estimate specifically for resale value, but that’s what it is—an estimate.
It’s also worth checking for used cars like yours on sites like craigslist.com or iseecars.com to see asking prices. Give yourself a spread of a few years, e.g. For example, you can search for Ford Explorers from 2011 to 2013 if yours is a 2012. Subtract 10 to 15 percent from the asking price, and that’s more than likely the real price of the car when it changes hands.
What is your car loan status?
It’s also worth researching the value of your trade-in versus what you owe on it, also known as your loan balance. Hopefully, your loan amount is less than the value of your car, meaning you have “positive equity.” You can trade a vehicle that you are “upside down” meaning you owe more than it’s worth or have “negative equity”. However, the repayment amount for your old loan will be deducted from the merchant’s quote.
Almost all vehicles depreciate in value, except for the few used ones that are worth more than you paid for them new. However, some cars hold their value better than others. A dealer may offer to add the extra money needed to pay off your old vehicle by “carrying” the negative equity into the new car loan terms, which can be a problem as it breaks the negative cycle Equity for your new vehicle loan can continue, just as you can with your current loan. And if you have low credit or bad credit, the lender will most likely offer less desirable loan terms, including a higher interest rate, which can translate into higher monthly payments.
This is the perfect time to carefully consider the projected resale value of your next vehicle. While no one likes to think about getting rid of the vehicle they want to buy, the reality is that you will eventually sell or trade in your next car just like you trade in your current car. Leverage iSeeCars’ current studies of vehicles that depreciate the least and the most to identify a model that retains its value best, giving you higher value for the next vehicle you buy, when you are done with this.
Are you exchanging your car for a new or used car?
When it comes time to trade in your current vehicle, think twice about whether you need a brand new car or you really just want something a few years newer than what you have. Used car dealers will also give you trade-in value as part of the purchase of a new (for you) used car, but you can’t necessarily expect to get as much for your car as you would for a new vehicle. New car dealers always have a used car lot, which is usually populated by very clean vehicles. Used vehicles that are ‘certified’, meaning they have been thoroughly inspected and may even have a warranty, are the most expensive used cars at a new car dealership, although they can be worthwhile. (Check out our handy guide to learn more about what certified used vehicle means.
And as for that new vehicle, you can expect a discount on the sticker price on most cars, sometimes in the form of factory or dealer incentives. It can be a very small discount if you’re craving a top seller, or a larger discount if it’s a slower selling model. If there’s a discount of more than $500 or zero percent financing, chances are the vehicle won’t sell like hotcakes. Ideally, you get the full trade-in value of your car plus a discount off the list price of the new car. Even non-haggling traders usually haggle over trade-in value when it means making a sale. Also, remember that you don’t have to purchase a vehicle to use your trade-in vehicle; Trade-ins are also accepted when leasing a car.
Stay alert throughout the buying process
It doesn’t matter if you’re buying a car outright or using your current car as a trade-in, always shop around and pay special attention to dealer add-ons that increase the sticker price beyond what the manufacturer suggests. There’s a reason they call it “recommended retail price” — new car dealers can charge whatever they want. If you’re significantly over the actual value of your trade-in, the dealer may try to get it back by charging more for the vehicle you bought. Always focus on the difference between what the dealer gives you as trade-in value and the agreed purchase price of the car you are buying.
After negotiating your best car price, watch out for the person in the cute glass office who actually closes the deal. He or she may be trying to sell you accessories, pinstripes, primer, an extended warranty, larger wheels and tires, insurance on the loan itself, a loan with higher interest rates, a longer repayment period, a price lower than what was discussed. in value for your car and everything else that increases the dealer’s bottom line.
Buyers often assume that the deal is closed once a purchase price has been determined and a trade-in value has been agreed. But the deal isn’t complete until all the paperwork is signed, and you need to carefully consider the additional costs when the deal is finalized. Sales tax and registration costs are unavoidable, and some “documentation” fees make sense, although you should ask the retailer about each of them to confirm what you’re paying for.
Remember: you are a professional car salesman. They are hobby car buyers. If you’re easily swayed or unsure that you can get the best deal, bring along that car-mad friend who’s likely been through this car-buying process many times and understands the nuances—someone who can matter-of-factly say “no.” when the deal isn’t a very good deal.
More car buying tips:
If you are interested in a new or used car to replace the vehicle you are trading or selling, be sure to check out iSeeCars’ award-winning listings car search engine. It uses advanced algorithms to help buyers find the best car deals for all vehicle types and provides key insights and valuable resources like the iSeeCars free VIN check report and Best Cars rankings. Filter by make, model, price and options to find the best deal on your next vehicle.This article, How does an auto deposit work?, originally appeared on iSeeCars.com.
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