Used Car Trade In Value
How Car Dealers
Figure Trade Values
When figuring the used car trade in value dealers rely mainly of two values, neither of which is the Kelly Trade In Value.
That may make you scratch your head a bit, but the Kelly or KBB Trade Value is more for consumers looking for a ballpark, rough estimate of what their trade is worth.
Of course, there may be some dealers out there using Kelly to figure trade in values, but I've never met nor worked for one that does.
How Car Dealers Figure
Used Car Trade In Values
Car dealers typically use two sources to figure trade in values:
- Wholesale Blue Book Value (This is the Magic Number)
- The Manheim Market Report (MMR)
The MMR is an auction report that averages together hundreds and thousands of vehicle sales (nationally or regionally) to help car dealers determine what they would be able to buy a comparable car for at auction.Unfortunately for you the consumer,
neither one of these values is available for free.
When using the MMR sales averages, most dealers will add transportation costs (what they would pay if buying your car from the auction) to the auction sales average and then subtract the expected reconditioning costs from that figure.
Car dealers use both of these values
as sort of a checks and balances type of system.
For instance, if they've found that the KBB Wholesale Value is $10,000 and that the MMR is reporting the average sale price to be $11,200 then they will probably use a percentage off of the KBB value to value your trade and might start by offering you $8,000.
Even though they may start at $8,000, they know that they have some flexibility here and could probably give you real money of $10,500 if that's what it takes to make a deal.
On the other hand, if the Wholesale Value is $10,000, but the average auction sale price is $6,500 then they would probably not want to put anymore than $7,000 into your trade.
How I Do It
I personally don't care to use the MMR to figure used car trade in values, but do reference it, because my dealer requires me to.
Usually, what I like to do is figure the KBB Wholesale Value and shoot for a 20% discount, knowing that I may pay up to the full wholesale book value if it's a nice car that I feel will sell fast.
I also want to be sure it will get through the service department without any major repairs.
If the car has more than 100,000 miles I shoot for an even higher discount, like 30-40% off of KBB Wholesale, sometimes even higher. This is due to the difficulty in financing high mile cars.
How Does This Affect
Your Used Car Trade In Value?
This page was meant to be more informational than educational unlike the other guides for figuring dealer cost and maximizing your trade in value, but if there are two things to take from this page they would be:
- Don't accept their first offer for your trade! There is almost always more money they are willing to pay.
- If you want top dollar for your trade in ask for it, in fact...Demand It! However, in order to do this you are going to have to show the dealer that your car is worth all the money.
You'll do this by making the car appear "front line ready." If the dealer sees that your trade is going to sail through the shop with limited repair bills and is pretty much ready to go straight to the front line and up for sale, then they are more likely to give you top dollar.
Make it "front line ready" by detailing it, servicing it and replacing tires if needed. Don't go overboard with these costs, do just enough for the dealer to feel that it's well maintained and a clean car. Most dealers used car inspections take all of a few minutes and your trade ins first impression will mean a lot.Now that you've learned how dealers figure your
used car trade in value, what would you like to do next?
Or you can...Master all the KBB Used Car Values by returning from -
Used Car Trade In Value to KBB Guide
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