Car Buying Pt. 2: Trading Time & Finance

So you have that old jalopy lying around, the car's barely running, the shocks squeak, and the transmission slips more than a 4 year-old on ice. What to do? Sell it yourself or drive it to the local car lot in hopes of fetching maximum dollar. If you opt for the latter, you can be rest assured that even the most immaculate of trades will lose money. My IS 300, that I could have potentially traded, would have only netted me $8000 tops for trade-in value at the dealership. I am in the position that if I sold it myself I'd get about the same as what I owe for the car. There is nothing worse than driving off a new car from the lot knowing that it will lose 20%-30% of its value, and what's even worse is that more and more people opt to trade in a car knowing they are upside-down (owe more than the car's worth) on the loan which means that it will take that much longer to be at a break-even point. Well the 20 minutes you spend listing the car yourself on Auto Trader or Craigslist, could save you thousands and put you in a better position when negotiating at the dealership. Think of it, sure you have to spend time meeting prospective buyers and answering their questions, avoiding scams, and the occasional low-ball offer without seeing the car (I never understood this one, but I got at least 2 such phone calls). Does 2-3 weeks of this equal $2000 or more and put more leverage in your favor? Sure it does and patience and perseverance always payoff!

Once you've gotten rid of your car, the next option is to obtain financing. If your credit is decent enough you could even arrange this step prior to getting rid of our ride. Your local credit union, your personal bank, Capital One, and Lending Tree are all great sources for obtaining financing. If you opt for the latter two you can even get financed while in your underwear. Either way, arranging financing before sitting down for dealer negotiations puts the buyer in power. Being in power feels great! But before you go to the dealership with check or cash in hand make sure you do this...

Next blog: The Price is Right?