Trading in a more expensive car

[TropicOrange]

Sorry I did not search posts if this was covered recently apologies.

Let's not get into why, but we have a brand new SUV (Mercedes), a few months old, that we want to trade in for a smaller car, say a TDI wagon or something similar. My question is on trading it in, are we likely to get a fair price or should we not even bother, we should sell the SUV ourselves then go for wagon? Any other advice?

[Knight2000]

Sorry I did not search posts if this was covered recently apologies.

Let's not get into why, but we have a brand new SUV (Mercedes), a few months old, that we want to trade in for a smaller car, say a TDI wagon or something similar. My question is on trading it in, are we likely to get a fair price or should we not even bother, we should sell the SUV ourselves then go for wagon? Any other advice?

Either way, you're going to lose a buttload of money. As you probably know, your vehicle probably dropped in value by 30%. If you go to a dealership to trade it in, you're probably looking at closer to 40%, or more, as they will have to resell it.

My suggestion would be to sell it privately for as much as you possibly can. Take it to a dealer, see what they say. If it's acceptable, take their offer and buy the car you want. It's always easier to sell to a dealer -- less legwork for you.

[TropicOrange]

Yeah I guess we can go to a few dealers to see what they offer. I wonder if we would get better deal for a new car as opposed to a used one. My original intent was to buy a used TDI Wagon...

[bigbodybenz]

Yeah I guess we can go to a few dealers to see what they offer. I wonder if we would get better deal for a new car as opposed to a used one. My original intent was to buy a used TDI Wagon...

Your car is worth what it's worth regardless of what you buy. A dealer may be able to show you an inflated value for yours if you buy used, but that just means that they could have discounted the vehicle more for you if you hadn't traded anything. And just as a note worth mentioning--even though it wasn't brought up yet, the KBB value on your car is probably nowhere near accurate.

[pknopp]

Your car is worth what it's worth regardless of what you buy.

True that within small differences. Basically this is true. Now a dealer might stretch a little further if you are buying another car off of them but it's all going to be close.

Another thing to consider especially with a vehicle this expensive is the tax implications. Let's just use this for an example. Let's say you could trade your Mercedes straight up for a TDI wagon. In that case in most places you would not pay any sales tax.

If you sold your Mercedes and then bought the TDI wagon, you are going to pay sales tax on the transaction so you need to make sure you can sell your vehicle for more than the tax implications to make it even worth bothering with.

6% of $27000 is $1,620. If a dealer would pay $27k for your car you would need to sell if for $28620 just to break even.

[TropicOrange]

Your car is worth what it's worth regardless of what you buy. A dealer may be able to show you an inflated value for yours if you buy used, but that just means that they could have discounted the vehicle more for you if you hadn't traded anything. And just as a note worth mentioning--even though it wasn't brought up yet, the KBB value on your car is probably nowhere near accurate.

Thanks for the comments. Can you elaborate on KBB value, do you mean KBB would show higher or lower? I have not looked at the KBB value, yet, it is my wife's car and I have not yet looked at any numbers.

[TropicOrange]

True that within small differences. Basically this is true. Now a dealer might stretch a little further if you are buying another car off of them but it's all going to be close.

Another thing to consider especially with a vehicle this expensive is the tax implications. Let's just use this for an example. Let's say you could trade your Mercedes straight up for a TDI wagon. In that case in most places you would not pay any sales tax.

If you sold your Mercedes and then bought the TDI wagon, you are going to pay sales tax on the transaction so you need to make sure you can sell your vehicle for more than the tax implications to make it even worth bothering with.

6% of $27000 is $1,620. If a dealer would pay $27k for your car you would need to sell if for $28620 just to break even.

Good points, thanks! I am considering listing the car at a decent price (which I will determine after seeing what dealers are offering for a trade in) to see if I get any takers. But the tax implications lean me even more towards trading in.

[deagle]

wouldn't it be easier to live w/ the MB ?

i wouldn't trade it in, and this is a textbook example of treating it as a separate transaction

[bigbodybenz]

Thanks for the comments. Can you elaborate on KBB value, do you mean KBB would show higher or lower? I have not looked at the KBB value, yet, it is my wife's car and I have not yet looked at any numbers.

With a nearly new or roughly a year old or less, KBB values seem to always be higher than actual value. I have traded or sold my last two cars with less than 10K miles...one with 3500 and the other with 7000, and both times KBB retail and trade in were way off. Retail values were higher than MSRP in both cases and trade in was off by $2K to almost $4K. I guess the point of my comment was that consulting KBB is pretty much useless if your car is a year old or less. Dont even look at it or it will just anger you when you dont come close to that trading in your car.

If you are going to dump it just be prepared to take a pretty big hit. You can negotiate all you want, but in the end just realize that you probably arent going to get what you want or think you should. Dont take it personally when you get a low trade in value from the dealership, its just a really bad way to do things financially. People do it, Ive done it, it just isnt always pretty.

[TropicOrange]

wouldn't it be easier to live w/ the MB ?

i wouldn't trade it in, and this is a textbook example of treating it as a separate transaction

It would be easier to keep it, but would be much more expensive. I have convinced my wife to ditch it and save money in the long run.

[TropicOrange]

If you are going to dump it just be prepared to take a pretty big hit. You can negotiate all you want, but in the end just realize that you probably arent going to get what you want or think you should. Dont take it personally when you get a low trade in value from the dealership, its just a really bad way to do things financially. People do it, Ive done it, it just isnt always pretty.

Yeah I am prepared for a big hit. But it will mean the cost of the cars we have will be less in the long run and monthly commitment is going to be much less.

[Knight2000]

Yeah I am prepared for a big hit. But it will mean the cost of the cars we have will be less in the long run and monthly commitment is going to be much less.

Not always, unless you plan to write a big check when you sell / trade-in the vehicle. If you roll negative equity into a car, your new payment MAY be equal to or more than your current payment. (Not saying that's 100% true, but in my experience selling, it's pretty darn close.)

[garethusa]

trading in a more expensive car less than a year old means losing a more lotta money fast.

with that MB, i don't think you will make any savings once this is all said and done.

[K_92]

Yeah I guess we can go to a few dealers to see what they offer. I wonder if we would get better deal for a new car as opposed to a used one. My original intent was to buy a used TDI Wagon...

I find playing one dealer of another usually works wonders when trying to negotiate on price or a good deal. This works especially well when the two models are directly keeping.