Determining how to deal with your current vehicle is often a difficult and stressful process. Where do I start? How do I trust and what will the difference be to my bottom line? First and foremost, define your end goal – what is it you are tying to do and why. Answer this question: I am changing vehicles because _______ (you fill in the blank). Throughout the process, keep your eye on your end goal. The steps to take to reach your goal are evaluating your current vehicle, establishing its true value and price, and deciding how to proceed.
Evaluate your current vehicle situation. Ask yourself these questions:
Establishing value and price:
Depending on the part of the country you live in, there are different value guides used by financial institutions to determine the lending value of vehicles. The most common are Kelly Blue Book, NADA and Black Book. The values you’ll find are not written in stone and certainly you know that the only way the car is worth what’s listed is if someone is willing to pay it. Vehicle values do not remain constant. They can depreciate daily by just a few dollars or hundreds of dollars.
Check your local ads to find similar vehicles, with similar equipment and miles. How are those vehicles priced? Remember, name brand dealers will typically overprice used vehicles and small mom and pop lots, who usually purchase cars through auction, will be selling vehicles that may look desirable, but are a mess under the hood. An analogy might be to look at dealers and mom and pop lots, comparing them to a high-end retail stores, selling clothes at full price verses a second-hand store, selling hand me downs. Your value should probably be somewhere in the middle.
Before you can sell your vehicle, you have to know how to get your title free and clear. If you have paid off the car, you already have the title. If you owe money, your lender has the title. If that is the case, you need to find out your loan balance. If the loan balance is higher than the values and pricing you have seen other selling similar cars for (you owe is more than the value you determined), that is most commonly called being “up side down” or negative equity. Typically, the reasons you may be upside down are that your vehicle has depreciated rather quickly, you financed the vehicle for longer than 60 months, you financed the balance from a previous auto purchase into your current loan, financed sales tax and protections packages into your loan or you simply paid too much for the vehicle in the first place.
If you have cash available to pay off the loan balance once the vehicle sells, then you are ready for the next step. If you do not have the cash to make up the difference, you would probably have to take a personal loan out for loan balance after the purchase. A dealer would also look at this as an opportunity to get you into another vehicle by adding the negative equity to your next purchase, therefore sealing your financial fate to your next vehicle. This isn’t the best scenario, but unfortunately very common.
How to proceed:
Trade verses sell: When trading in your vehicle, remember that a dealer looks at your car from a completely different point of view. The value will be established by what they can purchase a similar vehicle from at the local auction. They will then determine how much they can negotiate the value down. The up side is that you won’t have to hassle with the selling process, go to DMV, get your car smog tested (if necessary), answer the phone and meet to negotiate with strangers.
On the other hand, it is possible to get more money for your car in a private party sale. You do need to realize, however, that if faced with the exact same car, with the same price, a buyer is more likely to purchase through a dealer than from a private party. You also face possible liability if you have not had full disclosure with the private party buyer. In addition, selling to a private party can be a hassle and downright dangerous. Be sure you are aware that strangers will be calling you at all times and coming to see your car. Word of caution: No one is to ever meet you at your home to see and test drive the car.
By working with Auto Mentors, we will be your advocate and help you through this process, so you do not have to deal with the general public or greedy dealers. Our program is designed to help you make the best informed decision in order to reach your end goal. No hassle, no pressure. We will conduct an appraisal and determine, up front, the trade in value of your vehicle, based on the current true market value.
For more information, and to get started, go to: http://automentors.com/trade-in-values.