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Old 10-29-2007, 10:21 AM   #1
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Default Trading down at a dealer with positive equity

I have a vehicle that has an $18,000 trade in.
Payoff of loan is around $12,000.
That leaves $6,000 in equity.

How many dealers would actually want to work with me on trading down to a car that is in the $10,000-$12,000 range and not completely bend me over a barrel on my trade in value? Normaly you are trading in something worth less than you are buying. Or in the worst case possible, you are are trading down and rolling in negative equity.

How (well) does it work to roll in positive equity on a downgrade?

Alternative is to make a trek to the nearest Carmax and just sell it outright to them, but if I could I'd rather make one stop and make the most of the tax savings from the trade in.
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Old 10-29-2007, 10:32 AM   #2
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Default Trading down at a dealer with positive equity

I've heard of people going into car dealerships and driving off with a different car and a check. So I know it's possible.
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Old 10-29-2007, 10:41 AM   #3
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Default Trading down at a dealer with positive equity

It's possible to get what you want, but you are MUCH better off selling it yourself. Any dealer you go to will try to screw you over. It's the nature of the business.

Your best best is to take it to the dealer's used car lot and work a deal, get a check, then go look at new/newer cars. Make it a completely different transaction. Otherwise they will either give you less for your trade or less off of the new purchase. playing with the numbers until you make a deal that favors them.
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Old 10-29-2007, 10:49 AM   #4
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Default Trading down at a dealer with positive equity

I know what I'm facing when working with a car dealer. Selling on your own is fine with a car under $10,000. Once you start getting up into the $15,000+ range your ability to sell outright gets much harder. People just don't look at those cars. The more expensive the vehicle, the tougher the sell. Sometimes trade-ins/Carmax deals are the better option.

Plus actually taking the time, money, and inconveniences of actually trying to list and then sell it are a headache.

I'm just curious how much extra hosing I'd take on the trade in if I went with a $10,000 car vs. a $20,000 one.
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Old 10-29-2007, 05:41 PM   #5
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Default Trading down at a dealer with positive equity

Just research and know what you want before hand. If they don't give it to you, don't be afraid to walk away and try a different dealer. If no dealer will even consider what you want, research again!
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Old 10-29-2007, 07:33 PM   #6
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Default Trading down at a dealer with positive equity

Try CarMax.
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Old 10-29-2007, 07:53 PM   #7
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Default Trading down at a dealer with positive equity

It works the same. Two separate transactions and treat them as such. What they pay you for your car, and what you pay for the other one. You're not gaining or losing any leverage and can always walk away.

I actually had a really good experience with carmax recently getting 2500 more than what any other of 5 dealers was offering. As far as you're concerned, you don't care who buys your car, just that you get the price you will accept. The 1000-1500 I (she) could have gotten over carmax offer was worth it to not hassle with private selling.

The dealer doesn't care if you're trading down at all, they'll make their money. And they'll want to make money on BOTH transactions.

I did something similar, "sold" my car to a dealership, got a check. Then they started talking financing on my new car. "no thanks, I've already secured financing elsewhere, you'll get a check. I told you I was paying cash, I wasn't joking. I keep my word, now do you?" Oh man, you should have seen the look on his face! This was AFTER getting the price of the car down to invoice.
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Old 10-29-2007, 11:09 PM   #8
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Default Trading down at a dealer with positive equity

I bought my 2005 Canyon for $18k off a couple on Craigslist. If I had to sell it, I'd just post it on there again.
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Old 10-30-2007, 10:27 AM   #9
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Default Trading down at a dealer with positive equity

I'd go to Carmax first since they'll give you a price for free... takes maybe 30 minutes and is a painless process. I believe their offer is good for something like 3 days or 300 miles so you can use them as a guideline and go from there.
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Old 10-30-2007, 05:54 PM   #10
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Default Trading down at a dealer with positive equity

Spidey07 is right on. The reason it's so easy to get taken advantage of buying a new car is because there's so many things happening at once. After doing a bit of research I bought a new car for my wife 5 months ago (Nissan Versa), and broke it down in the following manner:

Negotiate the sale price of the car.
For this you should go to edmunds, yahoo cars, etc and find the invoice price of the car and the invoice price of the extras that you want. You're rarely going to find a car that has exactly the options you want, it'll either be settle for less, or pay for more, but at least have an idea of what the extras cost so you don't start paying $1000 for floormats.

By the time you're done negotiating for the car, you should have a specific list in front of you that exactly details out what you're purchasing and what their specific cost is. It should be in the ballpark of the costs you gathered from Edmunds, etc (Bring a notepad or printout with your research). If not, argue, or find another dealer. If/when the dealership bugs you about financing, trade-ins, anything, tell them you just want to talk about the price of the car + options, and nothing else.

Once the price is settled on, move to either your trade in, or financing. People differ in how you should approach this, but personally I applied for financing before I stepped into the dealership. Captial One, or any other number of reputable online loan companies can usually get back to you within 24 hours with a specific rate and terms. (Let's say you get approved for $25,000 at 48/months at a 7.9% rate). Also, it's best to ask for enough to cover the full price of the car including tax & title, as will be explained in trade-ins.

At the dealership, you can now tell them that you already have financing at the rate you were approved for, but IF they can beat these terms, you'll gladly use their financing. If they start asking about how much a month you want to pay, or if you want 80 months of payments tell them you're done talking about financing and will be using your pre-arranged check. This allows YOU to control the transaction, and eliminates the hours (literally) of going back & forth between financing manager & sales person to "ask" for better rates. Either they beat it, or they don't, end of story.

The only downside to this approach is if you've gotten a response from the company you applied with, the dealership cannot get any better rate, so if you're going to use this approach only apply with one company. (For example the 7.9% with Cap one will be the best the dealer could offer as well with this company when they shop your loan around. Essentially you're "locked in" at this rate)

Lastly once the financing is complete, talk to them about your possible trade-in.

Before you go to the dealer, do some research on your specific car on kbb, autotrader, craigstlist, etc. Get a good baseline idea of what your car and it's options/mileage/condition is on the market for. If it's a high value such as you believe yours has, and you really think you can get that much because you researched it, you won't have to sweat when the dealer offers you $10k less because it's "not a popular color" or some other nonsense. Generally you're always going to get less than general market value (the dealer has to make profit too), just ask yourself if you're willing to put the time and effort into selling your car for the market value, or if you'd rather just be done with it for the less money. This is the part where if your trade-in winds up being worth more than everything you've purchased + extras/tax/etc, you'll be cut a check for the extra amount.

Anyhow this post is more than long enough, but this is the process I went through after several weeks of research and I was extremely satisifed that I was getting a good deal, and that the dealership was able to make money too, all in all with the total transaction taking a little under an hour and a half.
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Old 10-30-2007, 06:42 PM   #11
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Default Trading down at a dealer with positive equity

As an added bonus, some states (Washington state for certain) will waive tax when trading down. When I traded in the Mustang on the S70, I paid no tax on the S70, all I paid was the basic title fee (something like $10) and the fee for new plates.

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