markwill12

I am planning to purchase an ES 300h soon. I don't buy cars very often I will be replacing a 2044 Honda Accord LX, which is still running very well and has only 70,000 on it. But the time has come

Anyway, in relation to the whole negotiating process, how much leeway would a dealer have with the trade in? I wasn't planning on trading it in (was planning to sell it privately) but thought I'd check just in case. I'm assuming it never pays, financially, to trade in, as opposed to a private sell. I do understand the convenience aspect, though, but I'm cheap and the extra $1,000 or so (I'm guessing) is - well - still $1,000.

So, is the Honda in any way useful with negotiating? I wasn't planning on even bringing it up with the dealer but thought I'd check the prevailing wisdom on this forum first.

Thanks.

Mark

keyframe13

Trading any care to dealer would make you lose money. It is always the best idea to sell it privately and you have a better negotiation point once you have to deal with just the price of the car and not with the price on your trade as well.
Trade in is for lazy people, if you value your money and it seems you do. get the most of it by selling it privately.
Also with little exceptions borrow money from dealer is also a scam many people fall for it.

markwill12

Yeah, I kind of figured but thought I'd check. By the way, can you explain more about the borrowing scam. I am almost certainly going to buy with cash but, for the sake of illustration, let's say I could get 0.9% or less and the calculations they throw at me are accurate for that rate, what's the scam? Or do you simply mean that it's easy to find better rates elsewhere? Beyond checking the rate and making sure they calculate things correctly using that rate, what scam techniques should I watch for?

Thanks.

Mark

bc6152

Good advice from keyframe. Trading your present vehicle in gets you a wholesale value. Selling it privately gets you close to retail but not what a dealer would get at retail. However, selling your vehicle privately is no walk in the park. Along with the serious buyers you will get the idiots that want your car for unrealistic prices or that simply wish to jerk you around. And what if something goes wrong with the car the first week after you sell it and the buyer comes knocking at your door? Also, today, one must be very careful who they let in their home or drive their car. In PA on a trade-in, the value of your car is credited against the sales tax and you pay less state tax. This is a plus and could be substantial. I believe that most states do this.

keyframe13

This is a common practice among dealers and nothing you can do about it. You apply with them, after filling your application they tell you that after checking with 10 banks you don;t qualify for 0.9% but you qualify for 3% or 4%.. In reality you did qualify but they'll cash the difference every month.
Best way is to go to your credit union if you have in your area (they have the best rates 99% of the time and more flexible than anyone else as they operate as non-profit, the banks needs to make profit with every loan so they cannot beat credit union rates.) and go with your own financing. Get a preapproval letter before you go to the dealer. Out of curiosity you can have the dealer run the score and see what rates they give you but I am sure they cannot beat what you got yourself from the CU Going to multiple lending sources will only count as one hard inquiry on your credit report if you shop for rates within a month.
Dealer will also try to add some unnecessary insurance like gap insurance or insurance on your loan that will add considerable to your montly payment.
When you go to the dealer they'll try to scam you in 3 ways: vehicle price, trade in value, interest rate on financing. Eliminating two of them will give you less stress and make you concentrate on negotiating just the price of the vehicle. Be a smart shopper and value your hard earned money.

SW17LS

Selling a car is a PITA. Its not worth $1-2k to me to go through that hassle, having to deal with people calling, driving the car, no shows. The other point is very real, that of the sales tax difference. So, you need to make more than the amount of the sales tax on the vehicle in order for it to be worthwhile.

For instance, I traded my 2010 ES in and got $26k. Sales tax where I am is 6%, I would need to have been able to get more than $27,560 to make it break even, and since the dealer listed it for $28k CPO I think that would have been unlikely.

markwill12

Great minds and all that... Yes, that's what I decided to investigate earlier today. I can get a 1.84% rate (fixed) through my credit union through CUDL (I'm learning about this stuff as I go).

At such a low rate I am contemplating putting the 20% down (which is a requirement for that rate) and throwing the 80% into an interest bearing account. If course, that's pretty insignificant these days (1% if I'm lucky!) but I retain the 80% for additional cash flow, in the unlikely event I need it, for a "net" rate of less than 1%. I'd just pay the monthly payment from that 80%. And, of course, there's always a reasonable chance that rates would rise, so it could work out OK.

Offsetting all that is the very simple notion that I have no non-mortgage debt - and like that. That is a strong temptation to just be done with it and pay the whole thing off. But I haven't decided yet.

But, yeah, I can't see me beating the credit union so it's good to have that in my pocket if I decide to go that route.

Thanks.

Mark

markwill12

I am having a slow brain day! Can you explain again how sales tax factors into this? Are you saying that the trade in value reduces the net cost of the car I am buying and hence reduces the sales tax on that purchase? Sales tax here is roughly 8.5% so this could be interesting.

Assuming I have that right, looking at the numbers for a $45,000 car (before tax) and looking at KBB private and trade in values, I'd come in around $750 better off if I go with the private sale. Quite honestly, I am not sure if that's worth all the hassle, as you say. So, yes, you make some good points about the hassle. Makes a lot of sense but does depend on the private vs. trade in differential, I guess.

By the way, what's the most effective way to negotiate with a trade in? Should I negotiate the new care purchase price first (and independent of the trade in)?

Thanks.

Mark

Arty101

I'm with Steve. It's not worth the hassle dealing with a private sale and strangers for the minimal gain. As long as its within KKB range, the reduction in sales tax on a new purchase also makes the case.

SW17LS

Correct, the purchase price of the car is reduced by the amount they give you in trade when calculating the sales tax. So, if you are buying a $40,000 car, and they give you $10,000 for your trade, your sales tax is calculated on $30,000.

You need to know what the car is worth. Get some offers from places that offer to buy cars, know what cars similar to yours are being listed for and sold for, so you know about what they are going to get for it. If its an older Honda they may not sell it on their lot, they may send it to auction. So, you should try and find out the general auction values. Remember they have to make some profit, so you have to figure that in.

Get the car as clean as possible, washed, cleaned inside, waxed. You want them to say "Hey, we don't have to do anything to this car".

Negotiate your purchase first. Then when that is done, say "Hey, why don't you guys take a look at my Honda and see what you can give me". Don't let on that you will be selling your Honda until that point, tell them you're going to give it your niece or something.

They'll low ball you the first time, but use your ammo "These cars are listed here, here, and here for this price" or "the last 3 at auction sold for this". Realize KBB is not all that realistic, you need to do your own research.

Good luck!

tripp

Agreed on hassle with private sale. You almost have to take them to the bank with you with cashiers check in hand. And let's not get started with the people that start off with "all i have is this"....if you knew you didn't have the asking price, then why even show up...sorry, bad experience once or twice...

keyframe13

I sold my cars (2) in less than a day and never negotiate one dime of the price I listed. Most people post 3 photos with their cell phone and don;t bother on telling much about the vehicle and that attracts bad buyers.
I can see you changing your mind and selling your vehicle private when you'll find out how much the dealer is willing to give you for the car
Let;s say you're expecting to sell your honda with 8k, the dealer will give you 6k and you'll save on tax less than $500. It;s a no brainer to sell your car and not trade in but you'll get into that once you appraise your car.

SW17LS

I would never go through the hassle for $1,500. I just wouldn't. I'm too busy, and quite frankly when I'm not busy...I want to be enjoying not being busy not making appointments with morons and letting them drive my car around.

keyframe13

It's not for everybody but $1500 it is a lot of money. it buys you a platinum warranty. Some people would give it to the dealers some would work a little for them. They are your money at the end.

coach1

I have had good success working deals on-line. I obtained realistic numbers on my car and received good discounts on my last 2 cars. If you have numbers going in....there is no hassle. Most of the time dealers will compete, although, I had to drive 100 miles to Atlanta (Mega Dealer), volume and inventory, struck a deal very close to retail on my trade and $3800 discount on the Lexus. I don't do garage sales and I donate my old cloths to Goodwill....but that is just me. $1500 is allot of money....it is also just a weekend get-away at the Hyatt....be careful where you park.