When does trade-in value come into play when negotiating?

I'll be looking to get a new 330 soon and have a question about the purchase process.

It makes sense that both negotiated price for the new car as well as the amount the dealer will give for your trade-in are both equally important since both impact your bottom line out the door. But, it just seems like, even if I were to solidify a good price that I had in my head for the new car, then the dealer may be likely to then low-ball me on the value for my trade-in. Is there just as much negotiation needed there? Should a buyer solidify the purchase price of the new car first, then demand fair Kelly Blue Book for the trade in? Or the other way around? It would really be a dissapointment to get the price I want on the car, but not be able to do the deal because of a low trade in value given.

Sorry for the newb question, but this is a bit new to me, especially with BMW dealers, and I was hoping for some insight from this forum where hopfully I'll get to be quite a bit if this works out!

Reply » When does trade-in value come into play when negotiating?

You are correct. You should make your best deal on the BM and then introduce the trade in. At least that is how I would do it. Actually I would sell my car on either autotrader.com or cars.com

Good luck.

Reply » When does trade-in value come into play when negotiating?

Quote:

Your instincts are right. Always negotiate new car price first. Don't mention financing, or leasing, or a trade in. The dealer expects to make money on everything, so you take one thing at a time. (Otherwise you won't be able to see where the profit is and will be at a disadvantage in the negotiating process.)

The key to success in a negotiation - to buy, to finance or lease, and to dispose of your used car - is to do your homework.

First, find out what the car you like is selling for based on the dealer's invoice. There are ways to check on line and I am sure other posters can help. A search here might be good, too. Also, if you aren't doing a European Delivery, be flexible in the options you might accept, or want, because a car on the dealer's lot is often a better to buy if you can take it - at least the negotiation can be a lot easier.

Second, have your lease or financing, or at least some form of lease or financing, lined up in advance. The dealer makes a profit on this and if you have your own financing, the dealer will usually meet or beat it. You can do a search here for on line leasing companies and on line lenders. You should also check with your credit union, which 90% of the time will give you the best deal. It is illegal for a dealer to requre you to obtain financing through him. You can, but you don't have to.

Third, and here is the shocker, the dealer usually makes more on your trade in than any other component of the new car purchase transaction. You need to know what your current car is selling for in your area. Kelly Blue Book, on line, is a good resource, but then do a reality check by looking in your local newspaper. Some cars are really soft, especially just before a new model comes out to obsolesce it, and KBB often doesn't pick that up. You can see how big the spread is in KBB between retail and wholesale, and you will soon realize that the best thing for you is to sell your car privately. If not, it's a fight to keep the dealer's profit down to only 5 or 10 times the amount of profit he will have made on the new car transaction, if you negotiate well enough.

The absolute worst thing you can do is negotiate as a package. So, get prepared first, and be willing to sell your used car by yourself. It can save you hundreds or thousands of dollars (depending on what the old car is).

Reply » When does trade-in value come into play when negotiating?

If you can, sell your car now.

Go to a local rental car place a negotiate a rental rate for a week or two until you buy another car.

But try to unload the car first. The money saved will more than make up for a few hundred dollars in rental car fees.

Reply » When does trade-in value come into play when negotiating?

Of course selling your car privately is the most cost-effective approach. But if you do trade-in, like I usually do because I don't want the timing hassles, then go into the dealership with a package cost in mind (sale price & trade-in price combined). I have the opposite view of Malibubimmer's. You can always give on one if you get on the other. Dealerships ALWAYS try to screw you on one or both ends of the combined deal but if you stick to your total package cost you'll be able to defend yourself.

In terms of negotiating you know you have to start with an unreasonably low package and be willing to haggle back to a reasonable package. You and the dealership may still have a different idea of what is reasonable but if you use Edmunds' values you'll be close. I haven't "failed" to close a deal within about 95% of my expectations yet.

Get your financing, if you need any, lined up ahead of time. I get a quote from my credit union on the best they could do for me and I use that at the dealership too. Even with credit union pre-approval the dealerships always meet or beat my credit union rate. Don't play the "four square" game (stupid form they use). Get the terms that you know you deserve. Ideally you bring an amortization table with you so you can point out how stupid (high interest rate or term length) their first offers are.

Reply » When does trade-in value come into play when negotiating?

Thanks guys.

I like both approaches suggested...the seperate and the joint bottom line. It's a tough call.

I've never been a part of a credit union. What does it take to join one? Is my regular bank likely a better bet than the dealer for financing? I also am guessing you ask for a ballpark that you need from the financer for a quote, since the final amount won't be known until you negotiate at the dealer.

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