Should I trade My Car into the Dealer or Just Sell

Should I Trade My Car Into The Dealer...Or Just Sell It Myself?

Trading your vehicle in to the dealer has its benefits and draw-downs. When is it a good idea? When is it a bad idea? All of these things come into play when you are trading your vehicle to a local dealer, we at Quest Auto Sales in Omaha Nebraska, are here to give you a completely unbiased answer and help you find the best option for your individual situation.


When you Don't Owe Any Money On Your Car
This is by far the best situation to have when you go into a dealership in Omaha, or anywhere. When you own your vehicle outright, trading it in is extremely easy.
In this situation, It really comes down to only 4 simple steps
  1. Find and Test Drive the Car you want
  2. Find the Retail Trade-In Value of your Car
  3. Use your car's profit towards your new vehicle
  4. Drive away
When you owe (roughly) what your car is worth
This is the 2nd best situation you will find yourself in when you are trading in your vehicle to a used car dealer in Omaha. When you owe (roughly) what your vehicle is worth, it drops off one of the steps in the previous process, but the only thing that changes is that you will not be able to use the profits from the car towards your next vehicle, because they wont be any profits!
  1. Find and Test Drive the Car you want
  2. Find the Retail Trade-In Value of your Car
  3. Trade  your vehicle straight across and cancel any money owed
  4. Drive Away
When you owe more than what your car is worth
This is the 3rd and worst situation you can find yourself in.  If you purchased the car before and financed it, you may run into this situation at least once in your life. You go into the Used Car Dealership in Omaha and they check the retail value of your trade..and they give you the bad news. You Owe More On the Car Than It's Worth.  What does this mean? It can be a little confusing at first, but once the basic math is involved, you will see how it breaks down. 

Let's say you own a used vehicle and you want to trade it in for an upgrade. You go to the dealership and they do an assessment on your vehicle. When they check the trade in value of the car let's say it comes back at $15,500 as the retail trade value. When you check your loan with the bank you have been paying, it says that you still owe them $18,500. That is a difference of $3000 dollars! This simply means that if you were to trade your car in for the retail value offered, there would still be $3000 floating around that the bank will expect to be paid for the car.  This amount HAS to go somewhere after all is said and done. So, they only option is to take that $3000 left over and roll it over into the next car loan. This sounds easy enough, but it can get a bit tricky with the banks. If the bank knows that the new vehicle you want to purchase is only worth $16,000 and you have $3000 to add to the bill due to your roll over, that means you will be needing a loan of $19,000 ($16,000 + $3000 =  $19,000) The bank will look at that car and say that they are unable to loan that much for the car which leaves you sitting there having to make another choice about which car you want to try and go for and monthly payments and everything! 

This is a very stressful situation to be in, which is easy to put blame on other people like the salesperson or the dealership. But just understand that it is not the CURRENT dealership's fault that the value of the car isn't where you owe, it may the previous dealer's fault, but not every dealer is the same. At a certain point, it becomes a personal responsibility that everyone must take on themselves, maybe they could have paid more, maybe they could have gotten a lower interest rate to make the payments lower...all of these things are a factor! 

To Trade or Not To Trade?
So now that we know the 3 situations that you may find yourself in, let's talk about whether its worth trading in or selling it on your own. 
Really at the end of the day, it is a personal choice of whether or not you should go one way or another. It boils down to 4 options. 
  1. Do you believe that you can sell it on your own and really make the money you claim it's worth?
  2. Do you have the time to wait for someone to buy the vehicles (typically 2-3 week long process)
  3. Do you have the resources to upload the vehicle on multiple websites and monitor each one and follow up with anyone interested?
  4. Do you have the money saved aside to pay the sales tax on the car after its sold?
If you have all 4 of these options locked down pat, then by all means go and sell the car on your own. You will definitely get the money you think the car is worth, but you will spend a lot of time and energy getting it done. If that is worth it to you, then go for it! 
Most people do not have all of those resources available to them, the biggest one being the "time" to get all of it done and monitor everything. This is a service that the dealership offers, it is their main purpose to promote and sell cars. 

Why Should I Put Money Down on My Car Loan?


1. Decreases your interest paid through the life of the loan.

Sometimes when potential customers come on to a local dealership's lot, the only thing they focus on is the actual price of the car. The price of the car is definitely important, there's no doubt about it. However, what ends up really helping or hurting you in the long run is the interest paid on that vehicle. This is a common misunderstanding that we as consumers are rarely taught about, unless your parents were aware of it, but if they weren't even aware of it to tell you about it, how would you learn?  Essentially what interest is, is a fee from the bank you are borrowing money from. 
There are tons of different things that go into what makes the bank determine your interest rate:
  • Car's Age 
  • Car's Price
  • Credit Score
  • Money Down 
  • Bank's relationship with Dealer
The big one that we want to discuss is the "money down" portion of this process.  See, when a bank knows that you have a certain amount of investment into the vehicle, they are more likely to help you reduce your interest rate. Plus, the amount of money you are asking to borrow decreases, which in turns helps them make a more aggressive rate for you. 

Look at it like this...if you had a loan amount for $25,000 and the term was 72 months at 8% interest. By the time you paid the load off after the 72 month period, your "$25,000 car" has now become a "$31,560 car."  But, why? Because of interest on the loan. We want to decrease the amount of interest paid over the life of the loan. So, let's use another example but this time we will be putting some money down against the loan before hand.  Let's say that you were able to put down $5000 against this same vehicle that costs $25,000. Your loan amount is now only $20,000. In this case, depending on the bank of course, you are able to negotiate a better interest rate other than the 8%, for this example lets say they give you a break down to only 6.5% interest. The total amount you pay at the end of the loan is only $24,200 + $5000 (down payment at the beginning of the loan). Your total investment is now only $29,200 for the SAME car. That is a savings of over $2300 bucks! What would you do with an extra $2300 in your pocket at the end of the loan? Probably use it as a down payment on the next vehicle and save yourself money there too!

2. Increases equity held in the vehicle

That is a confusing statement for first time buyers. You see, when you purchase a vehicle at MSPR, you run the risk of the car's value to diminish over time. This isn't always a problem, except when you go to trade the vehicle in later on, you will not see the same value of that vehicle a few years after it's purchased, that's just the way of the car world.  

So, what can we do to prevent this from happening?  HINT: Rhymes with "Honey Frown" 
.....the answer is Money Down.  

When you initially put money down on a vehicle, lets use the example from above, you bring the total loan amount of the car down $20,000 from the intitial $25,000. When depreciation on the vehicle happens, that $5000 you put down keeps you from being "flipped" in your car loan. 
"What does being "flipped" in my car loan mean"
Simple answer is: You owe more on the car, than what it's worth. 

Money down on that vehicle upfront helps keep you above the slip and slide of depreciation. When you go to trade you vehicle in later, you will be thanking us. There is nothing worse than owing more on a vehicle than it's worth, because that money HAS to go somewhere. Usually, it goes into the next car loan, which adds more money to the overall borrowed amount of the new car. Which then means, when you go to trade THAT car in after a couple years, you are going to be in the same "flipped" boat. So, do yourself a favor and put some money down right away on your vehicle and help your future self out.

3. Helps your Payments

The next more important thing to customer's is their monthly payment. 
  • "How much is my car going to cost per month?"
This is a very pressing issue for most people, especially those who are living on a month to month paycheck situation. How do you manipulate the amount you pay per month? You guessed it... Money Down. 
This works because the more money down you put towards the vehicle, the less you have to borrow from the bank. In the above example, we discussed how the lower amount you finance the better interest rate you will get. Let's again use the same numbers form before.
  • $25,000 @ 8% for 72month = $428/month
  • $20,000 @ 6.5% for 72months = $336/ month
That's almost $100 a months extra in your pocket EVERY MONTH! Ask yourself this...what would you do with an extra $100 in your pocket every month?

4. Better Chance of getting approved by the bank

When you have a rough credit history and the bank is deciding whether to loan to you or not, they are going to need a few things in order to make the deal happen. 
Typically they require some (if not all) of the following
  • A vehicle less than than 4 years old
  • Under 70,000 miles (depending on the banks)
  • Money Down 
  • Co-Signer (maybe)
When you have a substantial amount of money down on the car loan, the bank looks at this as if you are dedicated to making payments on this vehicle.  If you put $5000 down, you have a lower risk of ditching the vehicle on the side of the road and leaving the bank high and dry. This is a good sign when a potential customer puts forth the effort to add some collateral to the deal.
5. Lower interest rates

We discussed this a little bit earlier on in the first section, but to touch on it again because of its importance, lowering your interest rate as much as you can will help you massively in the future with the vehicle. So, make sure that when you are looking to finance a Used Car from local dealership to try and get the most aggressive interest rate that you qualify for. 
  • "What do you mean "Qualify For" don't we all get great interest rates"
The simple answer: No. Not at all. 

The banks that are lending the money out make the decision on what interest rate each individual customer will receive. So, you will get what your credit history, car loan history ECT will qualify you for. 


Should I buy a New or Used Car?



If you are in the market for an upgrade in vehicles, one of the most asked questions people start off asking is "Should I buy a New or Used Vehicle?" This question is one that is well loaded with multiple answers and is completely subject to the person's lifestyle and budget. As a Used Car Dealer in Omaha, our primary agenda is to obviously sell used cars, however, this question deserves both sides of the story. 

As car sales professionals, it is our civic (ha puns? no one?) duty to make sure our customers have a great experience and gain the most valuable content in order to make an educated decision about their purchase.  I mean, buying a car regardless if its a  new or a Used Car is a big decision, so make sure you have all your ducks in a row and weigh all the options!

New

With all the new makes and models that are coming out each and every year, it can be tempting to decide to just go and get one that is brand new and shiny.  This is one of the statement most buyers make when they are deciding between getting a New or Used Car: "Do I really want a car that somebody else has driven and has possibly messed something up with it, and I wont be able to fix it?"  This is a completely valid statement and should be addressed correctly.  Not everybody who has a car has completely damaged it and then turned it in to the dealer, your chances of receiving a vehicle that was completely destroys is very low.

There are many amazing qualities about a new vehicle:
  • Factory Warranty
  • Dealer Incentives and Discounts
  • More Customization Options (interior/exterior color)
  • Dealer Financing Rates

Used Cars
The used car market is so heavily saturated right now, you can't go even 10 miles without driving by a Used Car Dealer in Omaha. This has many benefits to the customers searching for the best price. With all the dealers aggressively selling these vehicles, you have an amazing opportunity to get quite the steal!  There is still some of a stigma about purchasing a Used Car, but in today's market, you are in the best environment to go the Used Car route versus the New.

To keep things unbiased as a used car dealer in omaha, there are some disadvantages to purchasing a used vehicle. Some of these include: no factory warranties, higher interest rates, possible condition of the car not meeting your standards. 

This should not scare you away because, there are so many benefits to purchasing a used car.
  • Cheaper Prices (compared to New Retail)
  • Depreciation has already taken its initial hit
  • Insurance Rates are Cheaper
  • Choice of older features that you liked more than the new
Hopefully this has helped you bridge the gap between which vehicle you should purchase next. As a Used Car Dealer in Omaha, Quest Auto Sales has sold thousand of Used Cars and we are proud to do so!

We do anything we can to make sure the experience is helpful whether we make the sale or not.  If you are going to buy a Used Car anytime soon, we suggest that you find a place like Quest Auto Sales that is family owned and operated, and has been for over 17 years!