Buying a new car and or trading car in can be stressful and uncomfortable. You never know if you are getting the best deal possible or if you are getting totally taken advantage of.
Here are some tips to keep in mind when you want to sell a used vehicle, or buy a new car.
1. Don’t get under water on your current car loan. If you are underwater , think about paying yrou current loan down until your loan and car value match or you have a bit of equity. This is important because as long as you keep buying cars on loans, and continue to borrow money, the amount you are underwater on yrou current car gets added to the next new car loan. This causes you to go deeper into debt and increases the cost of each new car. (see video for explanation)
2. When I sell my car I treat the transaction at a dealership as two separate transactions. The dealer will try to bundle the car price, loan, payments and trade in “allowance” in a way that sounds really good. But really breaking each piece down into its own transaction helps. While you may be concerned about monthly payments, the best deal comes when you buy a car you can afford at a decent price, so don’t get caught up in the monthly payments. Work out the price of the car. After this is settled work out the price for your trade in. You shouldn’t even discuss the trade in until you have settled on a price for the new car. (see more in the video)
3. Understand what your vehicle’s retail and trade in value really is. Your car may be very important to you, but you can’t sell emotional attachment. have reasonable expectations of the trade in value of your car vs the retail value. If you trade in , you will always get close to wholesale value, because the dealer has to make money. I usually sell my car on my own, because I can sell it closer to retail and put more money in my pocket. While trading car in is an easy solution, it is not the best financially.
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