Trading in a car when "right side up?"
 

I'm looking to unload the Boxster S soon and I think I'll get something smaller, cheaper, more practical for a city runabout. I've had a Smart Fortwo and Fiat 500, so my next target is likely a used Mini Cooper S.

I'm wondering how dealers feel about taking a car in trade that's worth more than the car they're selling. I know Carmax would have no problem with it, but their prices on something as popular as a Mini are laughable compared to actual Mini dealerships, which is saying something. Has anyone done this with a regular franchise dealer? How did it go?

Depends on the car - if it's a hot car that moves easily, most will trade in for more money. I'm not sure if a 987 Boxster qualifies. I would say if you were trading in to a Porsche dealer, they'd probably take the risk - a Mini dealer? Maybe not so much, but it's worth a try.

I've done it before. Hell, one time I traded in two cars on one car. Both times they wrote me out a check.

Why not just sell it outright? Or if you really want to be rid of it, sell it to Carmax? Trading it in is the worst possible scenario.

Taxes. At least in this state, if you trade you only pay sales tax on the difference.

If you're choosing Mini, try and stick with an r56 S with the new twin scroll turbo (2007+), as opposed to the older supercharged engines. It was a great redesign that 'fixed' alot of the first gen issues, and in my opinion looks better. I've driven both generations and now own a 2008 S. It's a really fun, quick little car and average 600 kms on a tank with 70% city driving. It is a jarring ride though with the runflat tires, etc., like to the point of 'loosening dental fillings' :eek:

Up here, these will set you back low $20K (low mileage, bought from Mini dealership, certified series w/two year unlimited warranty).

Exactly. In a deal like this, I'd save all of the sales tax (9.75% in Cook County) in addition to the cash I'd get back. To me, trading is typically a best-case scenario as you can typically get a nicer price on the trade if they're trying to move the car you're buying; one of the chief benefits of Carfax is it tells you how long they've been trying to unload a car. :) Unfortunately it's the end of roadster season and any dealer buying now would worry how long the car would be sitting on their lot.

The worst case scenario would be selling it privately - man, do I hate the hassle that comes with that.

You can trade anything in on anything else. You think you're "trading in", but the dealer sees it as two separate transactions, they are simply putting a value on your car and you're picking out one of theirs. The rest is negotitation. If yours is worth a lot more than theirs, no big deal.

Matt is right, you're always better off to sell your car outright. Since Illinois calculates sales tax on the trade difference (if you trade it in) buying a car that's less expensive means there would be ZERO sales tax due. If you sell it yourself, you will pay full sales tax on your next purchase. On a $20,000 car, that would be $1000 if private party, and $1250 if through a dealer. So if you sell it yourself or to CarMax, you need to sell it for $1250 more than if you traded it just to break even.

Since when are Mini's popular?

Cook county? Okay that's 1.00% more, and if you live in Chicago you're hit with another 1.25%, so a vehicle bought at a dealer would have a 8.50% tax rate. Private party sales are taxed differently, at 5% or less, even in Chicago.

Find a buyer for your Boxster, trade it in to me so you get the sales tax credit (they'd buy it from me) and I'll buy your Mini at auction in Chicago at wholesale. Best of all worlds.

Eric; I see that you are doing car deals all over the country. How are you able to not get caught out in buying sight unseen? Are you able to trust the evaluation of other dealers?

Cheers Richard

As a general rule, I don't buy from dealers. Most of the cars I buy come from companies that do not have retail outlets/license to sell their inventories so they must take them to auctions. These include banks (ie Chase), manufacturers (ie Mercedes-Benz), or manufacturer's finance arms (ie Mercedes-Benz Financial). They have nothing to hide, and no hidden reason to take a bad car to auction (like a dealer would). The auction does an independent condition report that is usually very thorough (esp MB, BMW, etc). They note every scratch, ding, and flaw. They note previous paintwork (acceptible or not), frame damage or repair, tire condition/depth, curb rash, smoke smell, missing items, etc. It's not perfect, but close enough. I've purchased a couple thousand cars this way and had only a handful of surprises. Usually they can be taken care of.

I wouldn't buy a 1987 Porsche 911 Carrera this way, but buying a 2010 Mercedes E350 this way is a pretty safe bet. 99.999% of cars have flaws. We just want to know what those flaws are to make an informed decision. Sometimes buying a car that needs tires, 3/32nds for example, an paying $500 less than one that has 6/32nd tires, is a good overall value. We just pay less, buy new 11/32 tires for $600, and add value overall. Other times you just have to decide what's normal wear and tear given the year and miles and decide what you can live with. Sometimes you just have to walk away, regardless of savings, because the car will never be able to be reconditioned to the client's expectations.

They do grade them overall, on a scale of 0.0 to 5.0. The cars we typically pursue are 3.0 or above. Usually, they are 4.0 or above. Often, they are 4.3 to 4.9 when we have enough to choose from, nationally. It just depends on why they got dropped to a lower grade, how easy it is to remedy, and if the selling price is enough of a discount to pay for the remedy or enough of a savings to live with it. Not everyone expects a perfect car. Not everyone wants to afford a perfect car. It's a pretty good system.

It's difficult to find needles in haystacks. If you come to me and say (actual current example), "I want a 2009-2011 Cayman S, has to be White with Black interior, has to be under 20K miles, has to have PDK transmission, has to have the Sport package, has to be flawless, etc".....well, they didn't make very many. It will take a loooong time to find that car. Someone else from Pelican wants a 997 Coupe with TipTronic for less than $40K, and it must be perfect. They're not out there in big numbers. Most of the cars at auctions are 2008 and newer, off lease, or at least a good reason to be there. The cars that were heavily leased new (MB, BMW, Audi, Mini, Ford, Toyota, etc) are out there in larger volumes, but they're 2-3 years old. So ask me to find one that's 4-5 years old and the numbers drop to 10% of the 2-3 year old cars.

Sometimes there are big savings, often there are not. Most clients save a little, but the big reason they do it is to avoid the dealer hassle, get good advice, and get exactly what they want/need.

YMMV

Eric, that was a very informative post. You are one of the PPOT assets, to be sure.

And, on the idea of trading a 987 valued more than the target purchase is something I would have not considered until reading you other post.

So, epbrown, why not let Eric handle your affairs? At least let him take a crack at moving your 987.

Pretty much since launch - they've got the best resale in their segment, despite a rep for unreliability with the early models.

Sorry, I should have clarified. I meant when were they so popular that they were hard to find and flew off lots? There are 75-100 Mini Cooper S hardtops at auction each week. Most are off lease.

I saw something similar in another thread referring to Eric the other day. But they spelled 'assets' slightly differently.

But I do agree with Milt....

When my wife was shopping for hers, it was a few grand cheaper to order new from the dealer than to buy any of their used ones on the lot. That was in the spring of 2006 and she saved almost $4k ordering new over what their lowest miles one with same options cost on the lot. Probably not like that anymore, but it happens.

Good information here. I hate the car buying process.

I end up negotiating with the dealer and my wife. They want more money, she (wife) wants it for less. Drives me freakin crazy.

What's so hard about selling a car? Clean it up, write an ad, take a few pictures, save thousands. As Eric detailed, you are not coming out ahead trading it in except in convenience. Remember that the dealership is in it to make money, ultimately they are giving you less than your car is worth and selling you a new car for less than they have invested. They may fool you into thinking you are getting a good deal however......

I just watched a near-flawless (Grade 4.9 of 5.0) loaded 2011 Mini Cooper S with 7,025 miles bring $21,800 at a BMW Financial sale in Las Vegas.

How does that compare with what you're seeing?

dude..what do you know about selling and buying cars? wait..nevermind. i thought i was talking to someone else..where did that guy go? :D