Trading a more expensive car at dealer

[jrlepage]

Hey all,

I recently inherited a 2011 Volvo XC70 Wagon (3.2L FWD A/T model) with 18,000 miles in pristine condition, and am considering trading in for a fully-loaded Elantra GT. Since the blue-book value of the Volvo appears to be somewhere in the $28-30k range, I should be receiving somewhere between $3-6k on the trade, possibly as high as $6,500 if I sell privately.

My question is, can you guys help me work out the pros/cons of trading at the dealer versus selling privately and then paying cash? Would I still pay full sales tax at the dealer if I trade? Aside from saving time and energy, are there any other benefits to trading at the dealer? What about using somewhere like Carmax to sell the Volvo?

Thanks!

[crownr0yal]

Originally Posted by jrlepage

Hey all,

I recently inherited a 2011 Volvo XC70 Wagon (3.2L FWD A/T model) with 18,000 miles in pristine condition, and am considering trading in for a fully-loaded Elantra GT. Since the blue-book value of the Volvo appears to be somewhere in the $28-30k range, I should be receiving somewhere between $3-6k on the trade, possibly as high as $6,500 if I sell privately.

My question is, can you guys help me work out the pros/cons of trading at the dealer versus selling privately and then paying cash? Would I still pay full sales tax at the dealer if I trade? Aside from saving time and energy, are there any other benefits to trading at the dealer? What about using somewhere like Carmax to sell the Volvo?

Thanks!

A dealership's primary goal is to make money. They will definitely not be writing you a check because your trade-in is worth more than the car you are buying. If anything, it will be an "even" trade and you'll end up losing money on the Volvo.

Sell it to CarMax and then pay cash for the vehicle, or sell it privately, and pay cash. You'll always get the most money selling privately.

You'll always pay full sales tax on the car. That's just a requirement. But, with paying cash, you have more buying power and the GT you buy will probably sell for less as there is no financing.

My advice? Sell privately and negotiate the GT with cold, hard, cash.

[Em-squared]

Yep, I agree. We don't have sales tax in Oregon, but other than that, I would do the same thing.

Just a question...why don't you like the Volvo? I would love to have one of those! I mean, the GT is nice, too, so I don't think you're crazy for trading it, but just curious.

[markjenn]

The sales tax situation with trades varies from state to state. Some charge on the full price of the new car regardless of trade, some only on the difference. Some cap the sales tax to some arbitrary max. A couple states let you claim a tax reduction even on a private sale provided the two transactions are within a certain time period, typically 90 days. You need to find out the situation in your state - this is definitely not something that is one size fits all.

You'll typically come out better selling privately, but not always. Depends on whether the dealer feels like your car is in demand and can be immediately "flipped". And there is the sales tax situation I just mentioned. There is a shortage of late-model, low-mileage used cars right now, so trade values are pretty good. You need to do some research online before approaching the dealer. You can then get an idea of the wholesale value the dealer is likely to give you vs. the private party value you're likely to get selling on your own. And keep in mind that selling a car privately can be a real PITA - people not showing up, having to accompany potential buyers on test drives, low-ball offers, etc.

Dealers have no issue with taking in trades that are worth more than the car you're buying - in fact, they love this as an expensive trade-in is their biggest profit generator. They'll write you a check on the spot.

Before you present the car to the dealer, clean it up and detail it to the degree you can. It makes a difference.

- Mark

[markjenn]

FYI, I just did a quick search and it appears TN does charge sales tax on the difference between the trade and new car, not on the full price of the new car. So if you trade a car that is worth more than the new car price, you'll pay no sales tax. (You'll still be charged some titling and registration fees.) Tax rates appear to depend on your county of residence, but might be as high as 9.5% overall. So for a $20K GT, this is a potential $1900 tax savings by trading rather than selling privately.

$2K is probably close to the difference between private party and wholesale values of the trade, so in your situation, I doubt you'd be money ahead selling privately. So I wouldn't do the hassle.

In a way, it is unfortunate that you can't take more tax advantage of your trade by buying something close to the full value of the trade. You're leaving $8K or so of trade value tax deduction on the table.

All this is just what I gleaned from spending 15 minutes on the net - you'll definitely want to spend more time and confirm things.

- Mark

[someguy]

I would keep the Volvo or maybe try to trade it straight up for a WRX but if you absolutely dont like it and must have a GT

Each dealer will do it a little different, the only way to find out what your local dealers may do is to stop by and find out.

[M3Chef]

Originally Posted by markjenn

You'll typically come out better selling privately, but not always. Depends on whether the dealer feels like your car is in demand and can be immediately "flipped". And there is the sales tax situation I just mentioned. There is a shortage of late-model, low-mileage used cars right now, so trade values are pretty good.

Before you present the car to the dealer, clean it up and detail it to the degree you can. It makes a difference.

- Mark

^^^This right here.^^^

Selling privately can net you more cash, but sometimes it's a pain. We sold my wife's 2005 Elantra to buy her Elantra GT. Took us a month to sell it. We had listings with three on-line sellers, had to deal with tire-kickers, had to pay for emissions certification (required in CA), lost $125 because we had just renewed the plates (again, thanks CA), and ended up with only $500 more than the dealer had offered for trade value.

A few years ago I traded my 2004 Sonata for a 1999 Ram 2500. Dealer gave me what I'd paid for the Sonata 8 months earlier (I'd bought it used) and cut me a check for the price difference on the truck right there. Left the dealer with the truck I needed and a check for $3500.

[7milesup]

Originally Posted by jrlepage

Hey all,

I recently inherited a 2011 Volvo XC70 Wagon (3.2L FWD A/T model) with 18,000 miles in pristine condition, and am considering trading in for a fully-loaded Elantra GT. Since the blue-book value of the Volvo appears to be somewhere in the $28-30k range, I should be receiving somewhere between $3-6k on the trade, possibly as high as $6,500 if I sell privately.

My question is, can you guys help me work out the pros/cons of trading at the dealer versus selling privately and then paying cash? Would I still pay full sales tax at the dealer if I trade? Aside from saving time and energy, are there any other benefits to trading at the dealer? What about using somewhere like Carmax to sell the Volvo?

Thanks!

First...too bad we don't live closer to each other, I would consider that car.

Second, I think that on this particular deal you are going to take a bath on the trade in. I hate leaving money on the table and I think you are going to be leaving at least a few thousand. Maybe that is not a big deal to you. There are a lot of people that don't want to hassle with selling their car. I look at it this way... If I net $3500 on selling the car myself and it takes me ten hours of my time that is $350. I don't know about you but that is slightly more than I make.

Or.... you could do this to the Volvo if you think it is boring......

[jrlepage]

Originally Posted by Em-squared

Yep, I agree. We don't have sales tax in Oregon, but other than that, I would do the same thing.

Just a question...why don't you like the Volvo? I would love to have one of those! I mean, the GT is nice, too, so I don't think you're crazy for trading it, but just curious.

Hey good question it's mainly because I have a substantial amount of student loan debt, and while the Volvo is a great vehicle, it's hard to pass up trading it for something brand new PLUS paying off a huge chunk of my debt. And yes, I just love the look and feel of the GT far more...

Thank you for all the suggestions everyone. I will definitely get a quote from Carmax before doing anything else.

Edit: Just noticed the bit about TN only charging the sales tax on the difference. That could make all the difference right there, since sales tax is around 10%.

[crownr0yal]

Now hurry up with the pictures of that gorgeous Accent!!!