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  #1  
Old 02-28-2001, 10:31 AM
DZ42 DZ42 is offline
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A question for the all-wise collective mind of the SDMB:
(since I didn't find anything useful in the search)

What's the deal with car dealerships that claim to offer "$3000 minimum for any trade-in!!", "Push, pull, or drag it in!!", or something like that.

If I've got an older car for a trade-in, clearly not worth the $3000, then what's the catch? Will they attempt to jack up the price of the new car by that much?

I may be looking to buy a newer used car in the near future - the value of used cars can be pretty well determined by age, condition, milage, etc., so it would be pretty difficult to sell one for $3000 more than it's true value I'd think.

So, is there anyone out there who understands these types of deals? Any personal experiences (good or bad)? Any other jewels of wisdom?

-Dave
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  #2  
Old 02-28-2001, 10:42 AM
Bricker Bricker is online now
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Car dealers' profits come from two sources: the 'front-end' profit, the difference between what the dealership bought your car for and what you pay for it, and 'back-end' -- the profit gained from the financing deal.

In general, you may be sure that if you are given a trade-in "allowance" on a piece of junk, that cost will be added into the front- or the back-end deals.

Not that you asked, but I find it very useful to ignore all the hype about trade-in allowances. Simply ask them what they believe the fair wholesale value of your car is. That's the figure to use. You should always shop your trade-in around anyway; get three or four offers for it <i>from dealerships</i> as a sale. The highest of those should be considered the fair wholesale value. That's what to demand for your car.

To determine the price to pay for the car you're buying, figure the dealer cost using Edmund's, and add a small profit. Don't negotiate down from the MSRP, and don't talk about how the trade-in allowance is affected by what car you buy. It isn't. Your trade-in has a value. Learn it and don't be fooled by hype.

- Rick
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  #3  
Old 02-28-2001, 10:49 AM
Anachronism Anachronism is offline
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I am pretty sure they just tack the $3000 onto the cost. Is there a disclaimer at the end of the commercial? Try not telling them about your trade in until you have negotiated a price.

It's probably like those 'trade in your car no matter how much you owe' deals. It's kind of funny in some states at the end of the commercial you hear negative equity applied to loan balance recited at a speed that would make an auctioneer hang his head in shame.

Umm... or what Bricker said. BTW Bricker use [ ] not < >
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  #4  
Old 02-28-2001, 11:39 AM
kunilou kunilou is offline
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One of the most aggravating things about buying a new car is that you never know how much the dealer actually pays for the car, hence you never know how much of a "deal" you're actually getting.

Suffice it to say, the $3,000 guaranteed trade-in means you'll be paying sticker price for the car. I'll bet if you walked into the dealer with no trade-in, you could magically negotiate a $3,000 discount off the sticker price.
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  #5  
Old 02-28-2001, 12:53 PM
smoke smoke is offline
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A really good site to check out is Kelley Blue Book. You can get an idea of the trade-in value, as well as the retail value (what a DEALER would sell it for- not what you'd sell it for privately. This factors in advertising and such) of your car.

Also, they have new cars listed, with itemized options, at both the dealer's invoice AND the SRP, based on area code.

My advice- ignore the SRP. Instead, add up the total cost of the car, with options, at dealer invoice price, then add 3-10%, depending on how "hot" of an item that particular car is. If it's a run-of-the-mill car, shoot towards the 3%. If it's harder to come by, in large demand, or needs to be special ordered, start looking at the 10-12% markup range.

Good Luck!
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