Getting a better return out of your old car
Drive around any mortgage belted suburb and inevitably there will be a congregation of unwanted second hand cars looking for new owners as their current ones look to pay down their mortgage or credit cards. This article may help those who are sick of waiting for a buyer who may never appear.
Further down we have supplied another alternative method to generate some cash from your unwanted or unused car that may be better than just selling it. It may actually create some passive income for you.
Trade-ins, Effort or convenience - Selling your unwanted car for the best price, easily!
The information was supplied by CarCrazy.com.au
When you decide to update your car, often the first form of grief is discovering the market value of your trade-in. There is not one value for this. In actual fact there are several values for your trade and it is up to you to determine which value you will accept in your quest to get the numbers correct in order to do a deal.
Firstly, there is the price the dealer will pay for your trade-in. This is a wholesale amount, that is actually an amount below wholesale, because it must allow some amount of devaluing of the true wholesale price for handling and risk.
A dealer will consider your trade as something that may be retailed off their lot, but more than likely it will be onsold to another wholesaler or dealer or auctioned off. Either way, the price they get from one of these “buyers” must be higher than the one they offer you as a trade-in to cover costs and make a profit.
The second value of your trade-in is the true wholesale price, the one without the risk. This is the price that you could get for your car if you identify the right dealer who will retail your car and you sell it direct to that party. This must be a higher price than the trade-in price offered by the dealer who has the car you want to buy because it eliminates the handling and the risk.
The third value of your trade is the price you can get for your car if you sell it privately. This value is not what a dealer puts on the sticker of an equivalent car on his lot. That price will be far higher than the private sale price of your car. The dealer is a commercial entity with overheads and liabilities. The car will most likely need some statutory warranty, be cleaned and detailed and any problems attended to. So this price is not relevant.
The private sale price is generally going to be close to the lowest price advertised on a well known used car website for an equivalent condition and aged vehicle.
However, this price will be higher than the two wholesale prices above.
As a guide, if a 5 year old vehicle with 100,000kms is offered $10,000 as a trade-in from the dealer, it will probably retail somewhere for around $15,000.
This probably means you can sell it privately between $11,500 and $12,500. Obviously you will need to advertise the car and wait for the right buyer to come along.
What may surprise you is that if you took the car directly to an auction house you may actually get close to the private sale price immediately.
It certainly pays to check out a few auction houses to see how much people pay. Auction houses sell to dealers and private customers so there is plenty of competition. On any given day there are literally hundreds of cars for sale and hundreds of buyers attending.
It is the most pro-active way to get the best possible price in the least possible time by participating in an actual live market.
As the vendor, you set the reserve price and most auction houses offer a no sale - no fee arrangement.
