JDMFairladyZ33

iTrader: (37)

Okay I saw this question in another thread and thought it would be helpful for people to have access to the answer without it being buried in the thread. Keep in mind that the results will vary by dealerships and market zones, but the over all process is the same. When the dealersip determines the trade in value of your car, forget KBB , Edmunds or anything like that. Those are all retail values and guilds for the consumer. What every car dealership uses is the wholesale "black book". This publication is updated every month and will reflect the make and model's value with mileage and market zone in consideration. You can not get a copy of this book unless you have a business such as a dealership, leasing company, car repair/resale shop, etc. Most dealerships will guard the book's info to the public with a death grip and some are willing to let you that a peep into it. Here are the steps they go through when you have a car for trade in.

• The dealership will determine the amount owed on the car if it hasn't been paid off yet. This is very important. If you have negative equity then don't except them to pay the full amount.

• The used car sales manager will look the #s over and the car to make sure the car is clean or problematic.

• He will then determine the preliminary value of the car based on the condition and market demand. What that means is the car will fall under 3 catagories:

1. Cash car: These are cars he can not resell on the lot due to condition, mileage, or other reasons. They will go to smaller mom and pop dealerships and/or auctions. If your car falls under this catagory then he will look up the value in the black book, call about 10 or so of his wholesale business partners such as Paccos car lot with no credit checks, and give you a determined price.
   
   
2. Cars he can resell on the lot: These are generally the ones with low mileage. He will also keep in consideration of how many of the make and model he already has and how that car has been selling. Once again, black book value dertermines this. If your car is a popular one that he knows won't sit long on his lot he may be aggressive in obtaining it which mean higher offers to you.
   
   
3. Cars he may not really want to sell but can tranfer: These are cars that the used car manager determines that has a value outside of his dealership at places such as auctions, other dealerships in his franchise ( If it's a big enough dealership) or other wholesale business partners that he deals with. This is dertermined if other dealerships are in need of this particular car.

Keep in mind after going through these steps, the used car manager will always come back first with a number that's below what your car is worth to him. This is what most people call the low ball effect. He is trying to make a profit right off the bat. If you don't bite then you guys may go back and forth a couple of times. Sometimes if the number he is willing to pay for your car is too low but he knows he can sell you a new car, then he will try to make up the differences in the sales price of the car. This is called the high low effect. That is why you never ever negotiate off of monthly payments. For example, if you are $2000 off on the trade then they will pretend that they will give you that $2000 on the trade side but then tack on $2000 or more on the price of the new car. Since you only see montly payments the numbers are hidden. Other times, the dealership will know they can make up the differences in financing and/or selling you warranties. That is why under very close negotiations you might get a situation in which they tell you the deal can not go through at a particular APR and/or without additional warranty.