How to Quickly Figure Out What a Dealer Will Pay
It's nice to have an idea of what a dealer will pay for your car without having to go through the negotiation process first. This will allow you determine if it's even worth selling to a dealer in the first place.
Make sure the listings are from dealers and pay attention to the list price. This price typically has a 20% profit built into it (although some high-volume dealers may limit this to as low as 10%). If the dealer is listing the car for $10,000, there is usually $2,000 of wiggle room. This doesn't mean the dealer paid $8,000 for the car, however.
After a dealer buys your car, they will incur some costs to fix any damage, repair any mechanical problems and replace worn tires or other accessories. A dealer will usually spend between $250 and $500 preparing the vehicle for sale.
So all you need to do to get an idea of what a dealer will pay for your car is to check the listing prices of similar cars, take 80% of that price and subtract $250 to $500 to get your "rough estimate".
If the car for sale is "factory certified", subtract another $1,000 from the price - this is because dealers invest extra money to get the cars certified.
Let's go through an example. Assume similar "factory certified" cars in your area are listed for $10,000. Take 80% of that - $8,000 - then subtract $1,000 for the certification, then another $250 to $500 for dealer preparation fees and you get: $6,500 to $6,750. That's the ballpark figure you'll get if you were to sell your car to a dealership.
Remember, this is only a ball-park figure. To get the true value, you'll need to shop your car around to multiple dealers.
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