Selling private-party will almost always net you more money than trade-in value at a dealership. The thing is, the dealership offers you convenience. They’ll likely buy your car right now with minimal hassle. If you sell private-party, you have to deal with strangers coming to your house, test driving your car, maybe wanting to take it to their mechanic to be checked out, possibly needing help with the title or other legal paperwork. What’s it worth to you?
Time of year to sell your car varies. I mostly agree that selling in spring after tax returns have come in, though. Selling during the fall/winter holidays is tough because most folks are saving up for Christmas. Also, used car prices definitely take a downward hit when the next model year comes out…. instantly, it seems, your used car is then 1 year older. If the new model has an all-new look, the hit is even bigger. Generally speaking, the sooner you sell your car, the more you’ll get for it.
When it comes to time to buy then, as stated above, most dealerships have end-of-month objectives. If the sales team hasn’t made their numbers for the month, they’re more likely to negotiate a better deal with you. The very end of the year, after Christmas, is also a great time to buy. Demand will be down so sales are sluggish and the sales people are hungry… and more importantly, the dealership doesn’t want to pay the yearly taxes for their inventory on site Dec.31st.
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And I like to share a few points about negotiation, a.k.a. haggling. Most dealers (and private-party folks) do it. A dealer though is supremely expert at the process and they have several techniques at their disposal by which they can ensure their profit. Keep an eye on the following three big ones:
1. Price of the car: most dealers will let you talk them off of the sticker price. General wisdom for a while was to research the vehicle’s invoice price and aim for that. The dealers, in partnership with the manufacturers, got wise and built in other price structures to offset that tactic. I don’t have a particular suggestion here other than to offer low and be stingy coming up on your offer.
2. Trade-in value: most dealers understand that trade-in value sucks. So they’ll offer you more than trade-in for your car, especially if you say it’s just not enough and you won’t deal. The amount over trade-in they give you is likely going to affect how low they’ll go off the sticker price of the new car, though.
3. Financing: Here’s the secret sauce. It makes sense for #1 and #2 to play off each other, but sometimes a customer is really great at negotiating in their favor so they’ve got a low purchase price and a high trade-in offer. The dealer still needs their profit, though. So when you’re sitting at the sales guy’s desk and he keeps getting up to go and talk to his sales manager because you’re busting his balls so much, what they’re doing is picking out a higher rate financing plan with which you’ll pay for the car… and their profits.
What you have to do is look at The Entire Offer – that is, the new car’s price + TT&L plus your car’s trade-in plus the financing plan – and weigh its financial costs & benefits to you. It’s a lot to consider, and you’ll be under some pressure to decide “now”.
If you want to see all of that action in play but with some transparency, then I suggest going to a “no-haggle”-type of dealership, like CarMax. The don’t negotiate on any of their prices and can put The Entire Offer in front of you with a pretty clear explanation, especially if you ask questions. It can be very educational, even if you don’t end up buying a car there.
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