Shopping for a new car? Then you’ve probably looked at your current set of wheels and wondered how much you would get for it. Or simply how to get rid of it? Trading in a car at a dealership is a popular and convenient way to sell it. Yet, according to financial journalist Neesa Moodley, you typically get 10-15% more money if you sell it privately. It is, however, possible to get a good price for your second-hand car. with the help of Neesa, we answer some of the most commonly asked questions about trade-ins.
Why should I trade in my car?
“Although you’ll get more money selling your car privately, don’t forget that this also comes with a bit more hassle and safety risks such as hijacking or car theft”, warns Neesa. “You have to field phone calls, do test drives with complete strangers and may be the victim of scams such as a fake proof of payment. You must be prepared to divulge provide your car’s full service and accident history. You’ll have to take care of any repairs yourself, have roadworthy tests done (R400-500) and process forms such as the change of ownership.
All of these costs add up and this process takes time. So unless you really know your cars and have sold many in your life, letting a dealership take the car off your hands is a much more convenient option.”
How are trade-in prices calculated?
If you do decide to trade in your car, it helps to understand the different terms you’ll hear:
- Retail price: This is the price of the car when someone buys it from a dealer. The selling price: trade-in price plus the dealer’s profit/mark-up. If you sell privately, you will get the retail price.
- Trade-in price: This is the price that the dealer will pay you for the car. This will go towards settling your vehicle finance or you’ll receive it as cash towards another car.
- Book value/’blue book value’: Dealers may talk of the blue book value – this is the industry-accepted dealer valuation book by TransUnion on which they will base their price.
How do I work out the value of my car?
You have three options:
- Do your own research by keeping an eye on retail sites such as carfind.co.za. Remember that special features such as a fancy sound system, leather seats and mags will always push up the price.
- Get an independent valuation, you can also get a bundled car value and car check (verification) report which will tell you if a car you want to buy is stolen or has been in an accident.
- Phone or visit a few different dealers and see what the average price is. “You don’t have to sell your car at the same dealership where you will be buying a new car. Generally, you will get more money for your current car if you sell it to a branded dealership – e.g. sell your Volkswagen to a Volkswagen dealership.” advises Neesa.
Tip: Keep every single receipt of repair work, new tyres etc. with your service history book. A well-looked-after car is always a desirable car.
How do I make my trade-in car attractive to dealers?
- Spend a bit of money and have all nicks and dents repaired. Dealers will use these as reasons to offer you less.
- Make sure your car is spotless.
- Get more tips here: 5 ways to increase the value of your car before selling.
Tip: “Car dealers have sales targets to meet every month. If you do decide to trade in and buy at the same dealership, go towards the end of the month and you’ll have more bargaining power as they try harder to make the sale!”
Which cars trade in well?
The most desirable cars are always ones that are still under warranty and/or motor plan. Second-hand cars tend to start having issues after 100 000km so that would be a good time to trade it in, or when your motor plan expires.
“As fuel prices rise, many people are starting to look for smaller cars”, says Neesa. “Certain models continue to be popular, even after they are discontinued.
Neesa Moodley is a freelance financial journalist for City Press and editor of InvestSA.
Take a look here for other articles from Santam that will give you further insight on what you need to know about buying a car.
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*The advice provided in this blog article should not be construed as advice from Santam but rather from experts in the field of business.