January 5, 2007, Newsletter Issue #72: How Dealers Rate Trade-Ins

Tip of the Week

When it comes to calculating the value of your trade-in, it's important to understand how dealers rate trade ins. Not to mention, knowing the trade-in value of a used car is a primary facet of knowing how much of new car you can afford. Trade-ins may leave ample room for car dealers to finagle fees and inflate the cost of a new model. Here are a few vital facts regarding trade ins:

1) The trade-in value is the amount a dealership will deduct from the purchase of a new car in exchange for a used vehicle.

2) Many dealers refer to the Internet based service, Black Book to set the value of a trade in.

3) Trade ins valuations are based on the "wholesale" value rather than by it retail value. The wholesale price will become the car dealership's asking price one the car is placed on the lot).

4) Dealers are unable to offer more than the wholesale value for a car that does not have a good trade-in value.

5) Trade-in values are based on the present state of the car or ‘as is'.

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