Car Dealers - General Curiosity Question?

Question

Have you ever had a customer who's trade in vehicle was worth more than the new (or new to them) car? It seems far fetched but if you traded your new Hummer in for a Corola (gas efficency??) how do you handle it?

Answer 1

It happens sometime. Nearly all dealers do this from time to time. If the traded vehicle is worth significantly more than the purchased one, the dealer cut a check to the customer.

One of the first deals I ever did was a gal who traded a Jensen Interceptor for a Buick Riviera. Her "boyfriend" gave her the Jensen and she hated it. She wanted a Riviera so we cut her a check for $5,000 and took the Jensen off her hands. Made a KILLING on that deal!

(The boyfriend wanted us to unwind the deal. Told him where to go.)

Answer 2

Its not far fetched.. its just tricky. If the person still owes on the very expensive car and is upside down on it (owes more than it is worth).. they may have to pay off some of the negative equity because the bank can only finance about 125% of the new cars value. Example.. You owe 35k on a H2 Hummer, the dealer appraised it for 28k.. you're 7k in the hole. If the MSRP on the Corolla is 17k, the max negative equity you would be able to get rid of would be about 2k. So you would need to put down 5k to cover the rest of you negative. If you have positive equity you can apply it to the new car or get a check back. I hope that makes sense to you.

Answer 3

Yeah, I would really have to rethink this decision. Their not going to pay you the enormous difference in the resell value between these two vehicles. They will try to steal the Hummer from you though.

Answer 4

The last car I traded was a almost new Mustang GT convertible, and we traded it in for a Sable. All I wound up paying was the taxes on it. We just traded even.