Car Buying Questions

Figuring My
Trade In Value


A car buying question from Ryan L. in Long Island, NY...
Questions about figuring my trade in value.


Hi Justin,

Great to come across your site. You offer some really helpful information that I think a lot of people can benefit from when going through the car buying process.

My car buying question is in relation to the four-step process you outline for getting the the best used car trade-in value.

I live in Long Island, NY and I have a 2008 Nissan Altima that I am considering trading in to my local dealership for a newer model car. The car has just under 26,000 miles on it and is in very good condition.

I went to KBB.com and came up with a Private Party value of $16,445 and a Trade-In Value of $14,400. I added the two figures together and divided by two as you suggested, and came to $15,422.

I also tried the second method you listed (multiplying the retail value by 75%) and came up with a lower figure of $14,732. When I averaged the figures from both methods together, I came up with a total of $15,078.

Is this close, then, to the value I should expect to get from the dealer, or do I have subtract dealer costs for reconditioning, etc.? If you could provide a ballpark range of what you think based on the numbers above, I would really appreciate it.

I know that when I bought the car with the package I wanted, the price at invoice was about $22,000 and the MSRP was about $23,500 (before taxes and other fees were included). So it would seem that $15,078 would seem low for a trade-in of a 2008 vehicle, but I could easily be mistaken.

Look forward to hearing your response.

Thanks again for your time.

-Ryan L.


Answer:

Hi Ryan,

I ran your car through my system and using a base Altima 2.5 sedan 4d (with standard power equipment, windows, locks, tilt, cruise, CD) and the numbers you've come up with are very close to the true wholesale KBB used car value.

I don't want to get too specific or KBB could get upset with me, but your numbers are very close. Just keep in mind that the value you've figured is the wholesale number and now you need to deduct expenses from there.

I know it seems crazy that, what is now, your used car trade in value can get hit so hard after such a short period of time, but new cars get hit pretty hard.

Expect the dealer to show you 12,000 (if they are lowballing you) and $13,500 as the number they'd really be okay owning it for.

Less expensive used Altima's are typically quick sellers and I'd try to stick to your guns and get full wholesale, or somewhere between 15k and 15,500.

The main reasons dealers hit a cars trade in values so hard is due to the fact that after taking it in on trade they'll have to recondition it and then they want to be able to have a $4-$5000 mark up for resale.

An easier way to show this is if the dealer gave you $18,000 for your Altima and then reconditioned it for an extra $500, then their cost is $18,500 and now they'll mark it up to $21,500 to $22,500 and as you know that's roughly what it would cost for someone to buy a brand new one.

They'd have a real hard time selling it and/or have to take a really "skinny" deal...which they don't like to do on used cars.

If the car is in good shape and needs very little work (maybe a detail and general servicing), then I'd personally would be okay taking $14,500 as my lowest number. A lot of this will just come down to how aggressive you want to be with them and how eager they are to sell the car you are looking to buy.

Sorry if that got a little long winded, but trade in values are somewhat difficult to explain, but I think this should help. If you have any further questions please don't hesitate...Justin.


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