Dealers Paying More Money for Trade-Ins Right Now
Trade-ins are commanding higher prices, according to a recent study by the National Automobile Dealers Association.
They're in demand due to a shortage of used cars.
NADA expects a 4% drop in used-car supplies throughout 2011, leading to a 5% to 10% price increase in used-car auction prices, which is one of the primary methods for car dealerships to acquire used vehicles.
When dealers can't get their vehicles at auction, they look elsewhere - namely trade-ins.
A lot of the price increases are due to pent-up demand.
With the economy improving, people are more able and willing to replace their old clunkers with a new car. GM and Chrysler have seen residual value gains of 15% to 20% for 2 to 5-year-old models, according to NADA.
Used Japanese, German and Korean brands have seen 10% price increases.
If you have a lease that ends soon, you can also take advantage of the situation by comparing your end-of-lease buyout price with the market price of the vehicle.
Some people are reporting price differences of several thousand dollars. It's certainly worth looking into.
3 Steps Every Car Buyer Needs to Take to Save Maximum MoneyThe key to getting the best deal is to gather price or lease bids from as many local dealers as possible. Then shop that best price around until no one can beat it. Here are the steps:
Step 1 Get Prices From My Trusted NetworkSelect the vehicle you're interested in to see if there are local dealers in my network who will provide you with their best upfront price. You will get direct access to an internet sales manager who you can further negotiate with online (no need to visit dealership).
Step 2 Get Prices From TrueCar / CarsDirectTrueCar, and CarsDirect are my top 2 online price quote recommendations. These services show you pre-negotiated prices from dealers closest to you - and the deals are usually pretty decent. But remember, you can still negotiate further.
Step 3 Complete my ChecklistFollow this up with my checklist to make sure you squeeze out every last bit of savings.
- Gregg Fidan
Each week, I'll keep you up-to-date on the latest car deals and news that might affect your purchase. This includes...
- Best Rebates, Incentives, and Lease Deals
- Latest Car Buying Scams and Tricks
- The Best & Worst Time to Buy a Car
- Which Cars You Should Avoid