You are in the market for a car. You need to finance your purchase, but do not have a cent to put down. However, you have a vehicle for trade. This, then, is your cash. Before you head down to your friendly neighborhood dealer, you need to do a few things first. Things that will save you both time and money.
Check your registration. Nothing is more embarrassing than to have the dealer tell you that your registration expired six months ago. You are not only breaking the law, but you cannot transfer your plates, so verify your registration.
Next make sure you have a title. If not, you may have to file for a "Lost Title Form" at your local motor vehicle office. Depending on state law, your dealer may provide lost title forms as well. Be advised that there is a fee. If the dealer is processing the lost title form, make sure he is charging only what is due to Motor Vehicle. For instance, in Connecticut, the fee is $25, which the dealer is obliged to collect. No additional charge should be assessed. Except what is due Motor Vehicle, processing of the lost title form should be covered by the dealer's Conveyance or Processing Fee. Make sure you know how much this is. It should be clearly legible on the dealer's purchase order. And make sure that motor vehicle charges in your state are not taxable.
Verify the names on the registration and title. If yours is the only name on either document, then yours is the only signature required when you trade in your car. If two names appear, then two signatures may be necessary. For example, in some states, if a car is registered as "Mr. and Mrs.," then both signatures need to be on the registration and title. If it reads "Mr. or Mrs.," then just one needs to sign. But again check your motor vehicle laws.
When the dealer appraises your trade, he will do so based on condition, year and miles. Luxury appointments like a sunroof, leather seats and navigation do enhance value, but only marginally in most cases, so don't expect a lot. After all, Square Deal Motors wants your car for nothing.
Before you set foot in a dealer, know the value of your trade. You can do this by going to a bookstore to pick up a copy of NADA. Or go online with Edmunds or Kelley's. Make sure you know the correct year, make and model and know the miles. List the equipment highlights and verify the condition. With the last named, you need to be honest. Your car may look in excellent condition to you, but be assured that to a dealer it will not. At best, judge your car's condition as "very good." I've seen a lot of keyboard commandos stare back in disbelief because their baby is worth five grand less than they thought it was. Again, be objective with the condition.
Dealers have recourse to the same rating sources as you do. However, they rely primarily on Galves. Galves supplies wholesale numbers. After all, if a dealer is going to front line your trade, why would he give you retail? And if he says he is, better check the math. Make sure he hasn't applied a rebate from the new car to boost your trade's value. If he has done this, excuse yourself and leave immediately. Then go home and vent your spleen in letters to the manufacturer, local Better Business Bureau and Chamber of Commerce.
What the dealer can do is inflate your trade value by borrowing from the profit margin of the car he is looking to sell. To know if he is doing this, get a copy of the worksheet or computer printout. Then take it to a knowledgeable third party before you make a decision.
Finally, make sure you get a copy of the trade appraisal form. Suppose you're buying the new car for $200 over invoice. And let's say you're getting $6,000 for your trade. Now, this might look like a good deal, but how do you know your trade wasn't appraised for $8,000? You won't unless you get a copy of the appraisal. Sure, you're getting a great deal on buying the new car at $200 over cost, but by undervaluing your trade, your smiling dealer just put two grand belonging to you in his pocket! Be smart. Ask for a copy of the trade appraisal. And if the party of the first part refuses, take your business elsewhere.
Share your thoughts about this article with the editor: Click Here
Sign up for our free weekly eNewsletter Surviving Tough Times.
Looking for an answer to a frugal living question? Click here to ask a Dollar Stretcher Stretchpert!
Copyright 1996 - 2013 "The Dollar Stretcher, Inc." All rights reserved unless specifically noted.
Contact the Dollar Stretcher at:
PO Box 14160
Bradenton FL 34280
"The Dollar Stretcher, Inc." does not assume responsibility for advice given. All advice should be weighed against your own abilities and circumstances and applied accordingly. It is up to the reader to determine if advice is safe and suitable for their own situation.