Trading in a car: How it works

When trading in a car the most important thing to remember is this. DO NOT let the salesman know its a part of the deal until after you have gone through the entire negotiation process. You must have a final price in writing on the car you are going to purchase.

Only at this point will you have the actual cash value for your car. He cannot use the “holdback” method on you to rip you off. To shed some light on what holding back is, let me explain.

When negotiating a car deal with a trade involved, I was required to fill out an appraisal sheet on the vehicle with all information pertaining to it. Then, my manager would have to look over the vehicle, and check auction data, and Kelly Blue Book .

Once we had gathered this information the manager would give me an ACV (Actual Cash Value) which is THE number that the dealership will pay for the car. In our example the car will have an ACV of $5000.

At this point the manager would encourage me to say that we would pay $3000 for the car due to auction data showing the car selling poorly at auction. In hopes we could negotiate the customer into letting us buy it for $4000 and thinking he got a good deal.

In the meantime, we “held back” $1000 on the trade, and thus added $1000 profit to our deal. In car salesman terms $1000 added into the profit of a deal usually means between 20-25% for him. So holding back is very appealing to a car salesman, because he stands to make an EXTRA $200-$250 dollars by simply ripping you off.

The best way to prepare for this is by doing your research. Go to and Edmunds and gather as much data on the trade in value of your car.

When trading in a car a few things the dealership will do is try to devalue your trade from the beginning by a technique called the “silent walkaround”. This tactic requires the salesman to do a walkaround of your car, while only making “pain” sounds and giving grimacing looks due to the “poor” state of your vehicle.

He is just mentally setting you up for the low number he is going to hit you with. Don’t believe for one second that a little chip in your paint is going to knock $500 off the value of your car, its absurd. But they will try and do that.

My tips for the silent walkaround is to have quotes to repair any dings and knicks with you. That way you can expect that to be subtracted from the price, because yes, the dealership will incur that cost in most cases.

In summation when you are going to buy a car and trade in a car have the following with you:
Kelly Blue Book trade in value for your vehicle.
Edmunds trade in value for your vehicle.
An estimate for minor repairs (if needed) such as dings, chips, and abrasions.
Usually, if you are familiar with it a quote from Carmax if you don’t have a Carmax near you then avoid this part.

By taking these few things with you, and keeping your trade out of the picture until you agree on a price, you can maximize your trade value! I hope this helps some of you get a better deal!

Love and Regards

Jason P

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6 Responses to “Trading in a car: How it works”

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