Book Values - N.A.D.A.

  Then there is the National Automotive Dealers Association or N.A.D.A. Kind of sounds like an authority doesn't it? If there is one true authority on what governs the car sales market it is this one. The values all around are to me the truest to what you will find out there. I believe this is largely due to it being the determining factor of how much a financial institution is going to loan you on a particular vehicle. When a financial institution is considering your loan they will want to see it booked out on NADA. Then there is what they refer to as "left-hand book." Just like it sounds. In an NADA book there is a column of dollar amounts on the left-hand side of the page all buy itself away from the trade and retail figures. This is called the loan value. Example: if a bank is determining  if they can approve your loan and they are willing to let you borrow 120% of left-hand book. This is the figure they are referring to. That means they would loan you 20% over that loan value in NADA if need be. This is the book I usually favored because I found it to be the most realistic. Not to mention played a big role in the financial end of things. All around my favorite of all of the resources.

Enter NADA

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Book Values - Kelley Blue Book

  Kelley Blue Book was a source I frequented often. Probably because it's general consensus of figures being, high. Signifigantly higher in some cases than the other sources. Most salesman would agree. I usually looked to KBB if I was trying to make things look a bit better on paper than they really were. As far as the vehicles you may be looking at buying I would take the values with a grain of salt. I think their retail figures are quite inflated. They will probably come in closer to a lot of "asking prices" and not what that model is really bringing at that point in time. In regards to the figure they offer for average trade value. It should be pretty close. Pretty easy to find what you are looking for in there too. You can find what you are looking for by year, make, and model. Retail vs. Trade-in and so on. This has been one of the industry standards for years and will continue to be for many more.

Enter KBB

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Book Values - Edmunds

  Although it was never one of my favored resources as a salesman I wanted to still give an honest review on it. Probably part of the reason I disliked it so much is because I always felt it was too far in favor of the consumer and sent customers in to me with unrealistic expectations. Ususally it was because they had missed some fine print like omitted destination charges and stuff like that. Edmunds has managed to make quite the name for themselves in the last 5 years or so though. A lot of this has to do with the in depth content Edmunds has on buying a car. I would say their new car buying resources are one of the best as far as quotes on new cars go. I did sometimes use their appraisal tool which I found to be fairly accurate most of the time. When I say accurate I mean what you could realistically expect a dealer to give you for your car. The site is fairly easy to navigate and I am sure you will find it useful if you hve not been there already. Definitey one to consider. Especially on new. I think ther used car search engine is as good as any. Just definitely not as popular as some of the big dogs like Cars.com or Autotrader

Enter Edmunds.com

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Tricks of the "Trade" - Trade-in that is

  I want to share with you a few tactics I used over the years and some that I saw my fellow associates use as well in regards to devaluing someone's trade-in. I have already mentioned the used car trade-in in various entries so far but I want to go over a few situations you may be presented with in regards to your trade-in value.

  Dealers usually do a damn fine job of emphazing why their car is the best one you will find like it and your trade-in, well just isn't worth quite what you thought it was. This is done for obvious reasons, profit. The less they can convince you your trade is worth, the more money they will make whether it is on the deal where they take it in on trade or whether it's the deal where they resell your trade. They want to own your vehicle for as much as possible, put as little money in it as possible, and sell it for as much as possible. That is the nature of the beast, and a hungry beast it is.

  I am not proud of any of this by any means but here are some things to watch for. Frequently, before I would even approach a customer about their trade-in value. I would build myself a little arsenal of information to back my numbers up. I would sneak off to another office and use the computer to compare book values. I would use KBB.com or NADA.com, and sometimes even Edmunds appraisal tool. The object was to find one if not more that were in my favor or at least close enough for me to use. Generally actual trade-in values were probably closer to NADA or Edmunds figure. KBB is usually inflated so I liked using those for the car I was selling. I would then print of some relevant help from one of these valid sources and head over to my customer with a deal worksheet with some figures. After I would knock them out of their chair with what I thought their trade was worth, I would simply act surpised and pull out my printouts and go on about how I thought we were being more than fair. I would show my printouts and go on about how often the values were updated and how NADA was the preferred source of financial institutions so it has to be right. Even after all of this it still was not uncommon for me to get resistance. We would then get into the actual condition of their vehicle and perhaps how strong the market was on their vehicle. I would sometimes tell them their particular car was not selling well, even though it was a flat out lie. If their vehicle needed some things I would begin itemizing it and putting a dollar amount on them just to make things sound worse than they were. Terrible, I know. I would even ask a bunch of questions to get them to second guess their trade. Such as. If it had been rustproofed? Had it been smoked in? Were they the only owner? Did it have factory warranty left? Anything to convince them I might have a hard time reselling their car and I didn't want it that bad. The fact is none of these really have an impact on your trade-in value. With the exception maybe of the smoking if it's really nasty. These are just things to make you feel like your trade could be worth less. Miles, make, model, equipment, condition, and year about cover it.

  Know the condition of your vehicle. Most used vehicles fall into the average category if everything works as it should and there is no signifiigant issues anywhere on the car. The excellent category is based closely on "mint" and most cars won't fit this criteria. Then there is usually fair and poor which is when you are getting into issues such as rust and features not working properly or not at all. With that said as long as you are reasonable with yourself about the actual condition of your car don't let someone tell you otherwise. They list the criteria that has to be met for each category for both you and your salesman to see. This means to also not let your salesman tell you his car is in excellent condition when it isn't.

They're all worth something

  Make sure your salesman is always comparing apple to apples. All to often I would choose the sources which favored the trade and the selling vehicle whether they were the same or not. I would just wait to see if they called me out on it and worry about it then. In which case I would usually just play dumb and go from there. What I mean is if your salesman is using KBB to justfy trade, be sure he uses KBB to justify his car too. Double check any equipment he may have "forgotten" to select when getting his online bid for your car too.

  They will ding you for cars that are out of season too so expect that. My best advise for this is to trade it at the best time of year for that particular type of vehicle. Cleanliness shouldn't be a big factor either. I didn't ever play that card much though myself. Lot's of people worry they don't get as much if their car is filthy or not. The fact is that if an hourly kid washing cars out back has to spend an extra two hours to prepare your car for the lot, is peanuts to them. They know how well a car will clean up by looking at it so don't think this would ever impact a number by even hundreds of dollars.

  Tires are a big deal though.We could quickly devalue a trade if it needed tires. They cost lots of money, even to a dealer. So if you need tires you can expect this. Most car dealers can put new tires on most cars for less than $300-$400 if they have a good source. Upwards of $500- $600 if its an SUV. Just don't let them tell you they need to spend $800-$1000 on tires to get your vehicle road ready because they will most likely try.

  They may tell you they think something catostophic may be getting ready to happen to scare you out of it. Just remember, they're salesman, not mechanics. If they did get a mechanic to look at something on it, remember, that mechanic is a form of salesman. If they take that car in on trade, he want's that job. If you run into any of these situations then you may want to have someone you know and trust look at your car to verify this. Just make sure you tell your mechanic you are planning to trade it in so he doesn't work up a bill of shit you don't really need. Wrenching on cars is where they make their money, not on advise. So you need to let them know what your intentions are.

  The main thing is to watch out for anything done to devalue your trade-in. They are going to be very biased so just make sure they are playing fair. If they are giving you a song and a dance, chances are that is all that it is.

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To Trade or Not to Trade... That is the Question

 Dealers frequently use what is called The Black Book when determining the trade value of your vehicle. Or at least reference it I should say. The Black Book is a little pocket book about the size of a calculator and is a weekly publication that dealers frequently subscribe to. Chances are if you look around in a used car manager or general manager's office you may spot one of these tucked away on the desk somewhere. Nowadays in addition to that they will also reference such sources online such as Manheim.com or Ove.com . These are auction sites that the dealers have access to so they can see what vehicles like yours are currently bringing at these mysterious auctions you seem to always be hearing about.

 Let me start off by saying you will most likely NEVER get what you really want for your trade in at a dealership. They may be able to "show" you what you are wanting for your trade in if they have you locked in on the right car. Which is one with a substantial markup that is capable of absorbing some of that money you want for your trade. There is a good chance the salesman will even use the word "show" when he is discussing your trade in value. Which since I don't sell cars anymore looking back, I was an idiot to ever say it. Let me explain. When a salesman first appraises your car he is going to typically fill out what is called an appraisal form or ACV form. This form is not meant for your eyes to see after the car has been appraised. The salesman may go over it with you in regards to equipment and any of your personal information they may want to put on it such as names and contact info but after that, you'll probably never see it again. ACV is always going to be abbreviated on any form that refers to it but if that store has any brains they wouldn't put it on any paperwork at all the customer sees. The last store I worked for did but most people don't know what it means or they just assume it doesn't have anything to do with the sales figures. ACV stands for "actual cash value." The number to which your car is actually worth to that store and the actual dollar amount that it will hit the books for after the sale.

Is it time to trade in that car?

 So what does ACV have to do with your car deal. It is very simple actually. I am going to use some theoretical numbers and explain this very easily. Lets say you are buying a $25,000 car. In this case we are going to say its used. We will say they own that car for $21,500 . $3,500 markup. You have a trade in that you would be happy getting $12,000 for. However, you did your research and you also think you can buy the car you are wanting for $23,500. So you want $12,000 for yours and want to pay no more than $23,500 for theirs. Salesman then appraises your car and he sits down with the figures. He's gonna low-ball you to test the waters. He may say something like "We're going to show you $10,500 for your trade and we will knock $500 off the car. That what you were thinking?" You say "No , not even close." He then says "Well, what were you hoping for? Is it the price of the car? Is it the trade?" This is where you laugh and say "both." This is where the chess game begins. What you are not seeing at this point is the ACV of your car. Now I wouldn't suggest ever saying "so what's my ACV?" They will just think you're a jerk and be cynical towards you for it most likely. You can keep your eye open or listen for it though and keep is as a silver bullet for later if things don't go as planned. By all rights your ACV card may say $11,000. In this case he is holding back on you. Some guys are incredible at holding back on trade, some rarely if ever do it. They are usually the good guys in the biz. Lets say that your car is worth $11,000 ACV. Based on the numbers he gave you, all he did is discount the car to look like a sweetheart and charged you the discount out of your actual trade in value. That $3,500 markup is still on the table. "What could we do to earn your business today?" he then says. You then say "Well I was hoping for $12,000 for mine and I have seen the same car you are selling for $23,500." He will likely then give you the old "Let me see what I can do" and go to his manager for rehashing.  This time he comes back with "The manager said he would put $500 more into your car and sell the car for $24,000 , he's really just trying to put this deal together." Ok so we're getting close. They are truly giving you what ACV (even though you don't know what ACV is) and you are within $500 of where you want to be on the car you are purchasing. However, with the numbers we are using there is still $2,500 on the table. Pretty typical used car profit really. Now I cannot tell you what they are going to own a certain car for. That is impossible. Is it wrong for them to make a profit? Absolutely not. Is it wrong for them to make big profits for overpricing cars and "dragging" (industry term) trades. Hell yes. In this case, with the numbers given you are $1,500 from where you truly want to be. On a five year loan that could be about $30 a month. At this point if you play your cards right. There is probably a good shot you could still get what you want. Most dealers will do a $1000 deal just to roll a unit. Sometimes less if it is an aged unit they are paying interest on and they just want the damn thing gone. If there are tumbleweeds blowing through the showroom that day that can be a big factor too. You just have to decide how much hardball you want to play. They can still "show" you that $12,000 for your trade. It just means they are getting a profit of only $1,500 when selling the car for $24,000 with an ACV of $11,000.

  I want to clear up a bit of what I think is a misconception about trading cars in. At least depending on what state you are in. I heard people say to me a lot in regards to trades "well, my neighbor said he would give me $15,000 for my car and you are only giving me $14,500." Now bear in mind, I sold in Illinois. Which means at a rate of 6.25% you won't pay that tax on the $14,500 going toward your purchase. This is a tax savings of $906.25. So at this point you are actually, in theory getting $406.25 more for your car than Joe down the street wants to give you. People overlook this all to often and it can usually be to a persons benefit to trade if it is worth a substantial amount and the tax savings is high. There are a few states that do not offer trade credit. At this time I know what they are but this post will be up for years and that could change so see if your state offers it before you head in. Also, same thing with tax in general. Some states don't collect on car deals period so please do your research on this.

  Does that car of yours need some work? Maybye you cracked a bumper skin at the supermarket or you have not gotten around to change that pesky 02 sensor keeping your check engine light on. Check to see what the dealer will give you for it and see how much they are penalizing your vehicle before you go dumping a bunch of money into it. All dealers will take any mechanical or superficial repairs into consideration when taking your vehicle on trade. Dealers have their resources for making all of these repairs. Internally within the store or not. In the end they get repairs made for as little money out of their pocket as they can. Don't rack your brain over small issues with your trade-in. There is a good chance that dealer can bring it up to par cheaper than you or I could go have it done for. Just don't put $3000 into your car to see a higher return when you trade it in. It most likely will not happen this way.
 The best I can say is do your research on NADA.com and KBB.com and decide before you go in what you are willing to pay for their car or receive for your trade. Averages between the two are reasonable expectations from what I saw over the years. Also, remember these salesman low-ball you. So when they ask what you want for your car, HIGH-ball them! If you really want $12,000, say $12,500 or $13,000. Low-ball them on their car too. Sure maybe they will chuckle or perhaps you may offend them a bit. Salesman have pretty tough skin so it isn't likely. The bottom line is it doesn't hurt to ask. They make their big money on people who don't ask. The absolute worst that is going to happen is they will say no. If the money is there and they want the deal, they'll do it. Period. Below is a list of general pointers that I hope you also find helpful. Also, if I lost you in the figures at all on this lay it out on some paper to perhaps help you to understand it better. Gosh, I LOVE giving this stuff away. Please pass it on.

• Best times to put a good deal together are when business is slow. Store owners hate to have a "no sale" day. If you are the only one there you are in the spotlight and that manager is hungry for a deal no matter how small.
• If you cannot reach an agreement in regards to trade, this will blow their mind. Ask them if they call other stores for "buy bids." Car dealerships have relationships with each other and another store that carries "your model" of car may put more into the ACV. In this case the store you are buying from is still taking your car in on trade but they have another store lined up to buy it for the "buy bid" amount. The fact that you know what a "buy bid" is will send  warning shot over the store that this isn't your first rodeo. Chances are they may just cave in and step it up on your car even if they do get "buy bids" from other stores.
• That car you have had your eye on has been there for months. Ask for a carfax and make sure people aren't afraid of it for some reason. Dealers usually don't want cars on their lot for more than 60 days especially when they are floor planned. Floor planned is when the dealer's bank owns the car and they pay interest on them everyday. Trading in towards an "aged unit" could get you a really good deal.
• Last days of the month or even last day of the year could get stores to step it up on trade. Dealers live by the month and they want as many units on the books as possible at the end of those months.
• Trades are seasonal. Don't trade in your convertibles in the winter. They will bring below book values. Same with 4X4 bringing all the money with a foot of snow on the ground. You get the picture.
• They're just cars. Unless it is something really rare that is bringing good money. Don't let anyone push you into a deal that doesn't feel good. There are plenty of Camrys, Tauruses, and Impalas to go around.

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The Infamous 4-square Sales Tactic

I was introduced to this at the second store I had worked for. It is just about what it sounds like. It is a deal worksheet divided into 4 areas with all your personal info written on top to look "official" lol. Typically the areas are divided into sales price of the car you are buying, value of your trade, how much money you are putting down, and what you can expect your monthly payment to be based on all of those figures. I am going to be honest and say that the sole purpose of this tactic is to make your head spin with all these numbers and literally break your heart. It is fully intended to shock the hell out of you and get any numbers out of your head you were hoping to do before you walked in the door. In a nutshell, make you feel as if your expectations to this point have been unreal.  It is also designed to mentally prepare a person with an inflated payment before they walk into the finance office to make any upselling easier when they get there.

 Now that you have seen these figures and you have a big lump in your throat like you are 6 and didn't really get what you wanted for Christmas. This is where the salesman goes over the figures with you and says things like "what were you hoping for?" There is still plenty of money on the table at this point. After all he just gave you his first proposal. Now that he has broken your heart he is going to play good cop/bad cop . He is going to poke and prod at you and try to figure out which one of those numbers really makes you tick. What I mean is. Generally there is an aspect of the deal that is most important to the customer such as trade in value or no money down. If you really want to put a salesman between a rock and a hard place at this point. Tell him you don't like any of the numbers lol. They are only going to manipulate the one that makes you happy anyway. In their defense though you cannot have it both ways. Trades are worth what they are worth and they can only sell a car for so little.

 What you need to do is look at your personal situation. Maybe you don't even have a trade. Maybe you are paying cash. We're down to 2 squares already now which really kills the tactic dead in its tracks. Truthfully, as long as our FICA score isn't a 450 and you truly know you have the ability to buy. You can tell them straight up how you want to see the numbers. If they have a problem with this then they are obviously so successful they don't need your sale and you probably don't want to buy a car from these folks anyway.

 Personally I recommend a good old white sheet of paper or their "other" worksheet for people like you lol. I am going to give you one piece of information at this time now which will allow you to tell them to leave the payment end of it out until you get into the finance office. With today's rates and sufficient credit you can expect to pay about $100 a month for every $5000 you finance on a 5 year note. Give or take $20/month .Example: financing around $20,000 you could expect to pay in the neighborhood of $400 a month on a 5 year loan. With that said, you can be sure you are looking at vehicles you can afford now so they don't use payment as leverage on you. With that said. Don't forget your fees as well. If you are wanting to be around $400 a month make sure you are looking at a car you think can be "bought" for around $18,000-$18,500 if fees come to $1500-$2000. Fees vary from state to state so get a general idea of these before you head in. We are at the sales desk at this point and we just want to hash out the price of the "car" itself. We are not interested in inflated payment figures full of gap insurance, extended warranties, and service plans. As for the money down, you can decide this as well when you get to the finance office. That's your business until you sign.

 So now that we have thrown "payment" out of their little scheme. We are just down to the price of the car and the value of the trade or maybe just the price of the car. Isn't it amazing how much the whole thing has been simplified just by taking the payment out? This is not what they want trust me lol. At this point though it will take some of your own research to determine fair values on either the car you are trading or the car you are buying. As a general rule. A new car you can typically expect around a 10% markup on a sticker price. This excludes factory incentives. If you are buying used get the average retail values between KBB and NADA based on condition and this should be fairly close to what you can expect to pay. If you can get it lower than that you're doing good. If you can't get to the averages between these two books though and strike a deal there is a possibility they own this car for more than they should. Up to you at this point if you want to look elsewhere or buy theirs. If it is something unique you can expect it to bring above book value though. In regards to trades do the same thing. Get collective average of both books and be sure you booking it as a trade. Trade and retail numbers are different for obvious reasons. Also, make sure you be honest with yourself about your vehicles condition. I seen all to often that the customer was a bit biased toward their trade. I myself would have to probably catch myself on this one. That line in the book values that reads EXCELLENT at the top. Well, that's more or less show room condition and about less than 5% of the vehicles out there will really qualify for this title. However, make sure they are playing by this rule as well. If they are showing you the best book numbers with their printout they made trying to justify their price make sure the car lives up to it. If he is claiming it's in excellent condition except for that little bumper scuff. Guess what buddy, it ain't in excellent condition.

 Now that we have broken it down to 2 (and maybe 1 in your case) simple figures we just want a difference number before fees. In other words. What are you going to sell me that car for with my trade? There is no smoke and mirrors at this point. If there car is $22000 and you think you can buy it for $20000 and you have a trade you are wanting $10000 then a difference of $10000 is what you are shooting for. It's fairly simple.

 One more thing I wanted to touch on quickly before I go is vehicle payoff. I plan to do a segment on this later but I want to touch on it so you know how it applies to a deal like this. Call the financial institution before you go work a deal anywhere. If they are a 4-square store or even not they will pry at this one to try to appease the "payment" issue. The best thing you can do on this is play dumb and factor the payoff number in your head into it when you are working the deal. For example. I will use the figures from the last paragraph. Lets say you worked a deal down to difference of $10000 and your trade-in payoff is $8300. Fees will be based on the $10000 (that could vary state to state) and your payoff will then be added to the total. So you are back up into the $20k neighborhood at this point.

 I would say the best advise to taking away a stores 4-square ammo away is to be vague about your finances (money down and payoff info) and don't express concern of payment. I have given you what types of payment you can expect for certain dollar amounts spent on 5 year terms and I can assure you that as long as the finance office does not have them loaded with "extras" and your credit is substantial it will be close enough to what I have said given the rate is competitive. If you should want to further payment estimates for different length terms or to play with different rates Bankrate.com has a wonderful payment calculator on their website. I hope you found this helpful and I hope it save some of you folks some money. Stay tuned, and I will post more of these.

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