Overhaulin'

Why are car dealers offering 2 thousand less for my trade in?

I am 2 years into a 5-year car loan and no longer upside down on its value. The Kelly Blue Book says its trade in value is $13,625, and I owe 11,509. I would like to use the 2 thousand in equity towards a new car. The two dealers I have gone to have said that they no longer go by what KBB says it is worth. They are firmly offering me just 11,500 for amy trade in. Am I missing something? The car is in pristine condition; no stains, scratches, very shinny paint. Very cute Manual transmission Mazda 3. I am only trading in because our family is growing. Another thing, can someone explain how a trade in can affect the taxes you have to pay in California. They are using some mumbo jumbo to confuse me. The 13,625 is the KBB trade in value. Private resale value is in the 15,000. Thank you for all the great help. ; )

Public Comments

1. they want the $2000 and mumbo jumbo is the way the game is played
2. They're car dealers... Isn't that enough of an explanation? I would rather share an airplane with a group of Al Qaeda alumni that missed the first trip. They're car dealers! Is there any other lower form of life?
3. I agree- they want your $$. Try to sell it yourself, and get more than $2,000 for a down payment.
4. a) the usual rule is that a car loses 30% as soon as used and 25% every year after. b) the $2000 is the profit a commercial trader needs to amke to pay for making a car saleable and advertising it, etc. The "book" price is an estimate on what two people trading non-commercially would pay/accept between themselves. I don't know Californian taxes but the usual rule in sales tax is that you pay on the gross value because the trade in is how you are paying (eg instead of cash). In Europe however VAT is paid on the net transfer value.
5. Some places go by a dealer book usually call a black book or they will have a specific name for it like Jergens for instance. This book they go by what they actually sell it for and profit they can make and also what they usually go for at their auto auction incase they can't sell it
6. Depends on if you're being quoted Wholesale bluebook, or retail. They're only going to give you wholesale, are you looking at retail bluebook for your own value? You won't get that, dealers have to make a profit, so they quote what they're willing to give you. Nothing prevents you from going out and getting 13k, except the hassle. So as long as you're willing to go thru the hoops of selling it yourself, you "might" get the 13k...or you might not. Up to you. They're not going to give you top dollar, and then can't sell it for over that. That's why there's Wholesale and Retail bluebook prices. Now do you understand? - The Gremlin Guy -
7. Yes you are missing something. Car Salesmen are shysters. Their job is to pay as little as possible and get as much money as possible. One of the many ways they do this is drastically underpaying the fair values of trade ins. Keep checking out other dealers, but this is very common and may keep occuring. Otherwise, you will need to sell the car yourself. You will get a better price for it, but it'll be a bit of a hassle. Only you can decide whether or not you would rather go through the hassle of selling your car to a private party to get a fair price, or save yourself the hassle by selling it to a dealer for an unfair price. I know nothing about the taxes however. Hopefully other answerers will.
8. One thing to realize is that kbb is a free service for customers, they get paid by traffic to their site. KBB is not a good guide for trade-in values. Most dealers (in the northeast anyway) use galves. Galves is the wholesale guide of choice, and it must be purchased. They use real life, real time, auction prices for a specific geographic. Galves is always lower than KBB. Most cars are about 2k less than KBB, so sounds like you are getting a fair trade value.
9. Hi Karla, Kelly Blue Book is a retail online buyers guide, I know of no dealer that has or ever had a "Kelly Blue Book". They do use, one or combination of other books/sources. The most common being yellow NADA guide for dealers, Nada also makes a whole sale 'bluebook' Some dealers go according to current local/regional auction pricing. Unfortunately Kelly Blue Book does not cut checks or buy cars, If they did I would sell a whole lot more cars. As an information source it is great but remember they get their info from various nationwide sources. And the number is an average of trade allowance. Trade allowance, if you dont know, is the actual value of your trade plus any applicable discounts. You ever notice how trade prices sometimes vary depending on actual vehicle at same dealership. With that being said, your trade allowance will vary. Two dealers said 11,500. Are they comparing same car, meaning against same model. The actual value could be 11,000 with 500 added discount. And national average is higher because some vehicles have more room for discount. Say 11,000 with 4000 discount. Look up trade allowance on kbb or use other resources. edmunds.com or nadagudelines.com, but remeber only use as a guideline. The dealer needs to fix anything that might be wrong, even if you dont see it, they have to preventive mainteance, or replace half worn but still good for you tires or brakes, warranty the vehicle for next buyer and most important of all. Make a profit. Trade and taxes. Since you already paid tax on your current vehicle when you bought it. The trade price is deducted from the selling price. That subtotal is taxed. (im in NY) selling price-trade allowance=taxable subtotal+sales tax+applicable fees+your payoff-down payment=Amount to finace. Good Luck, email me if i can be of more help -Chris