Question for anyone working at a dealership.

[The Sauce]

I am considering buying a used car from a local dealership. It just so happens that I know the person who owned the car previously (he works at my same business). He told me that he got $19,500 on trade in. The dealership is asking $25,000. $5,500 seems like a pretty steep mark-up. I'm happy to let the dealership make a profit, but what would be a reasonable offer, all other things being equal?

 

[Evilviking]

What does kbb, true car and edmunds value it at?

 

[TridenT]

Was expecting "how can you live with yourself?"

It doesn't matter what the dealership got for it, they're going to sell it for whatever they think they can get it for. You might know but it doesn't matter. You should've bought the car directly. You will not get private party pricing.

 

[T2urtle]

I would say the bottom line is $23k. Everyone has to be paid.

They buy low, sell high like everyone else. They take risk on not selling and or buying broken junk.


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[The Sauce]

KBB puts the range at about 23,500 - 25,000 roughly. When the dealer gets a trade in do they have to pay taxes on the value of the trade in? Do they have other fees that eat into the value like listing fees. Obviously overhead and such.

 

[CombatChuk]

Start at 500 over what they got, and work your way up until they say... "Yes"

 

[WackyDan]

Well, you can make a lower offer can't you?

Secondly, I would assume that the dealer provides some sort of warranty? We might also assume that they performed some maintenance whether it be a simple oil change or replacing a chipped windshield.

It's up to you to decide what your best offer will be to the dealer and whether you will choose to move on to another car or dealer when they won't accept your offer.

 

[HybridSquirrel]

The dealer likely did an inspection and performed some minor repairs. Ask for a copy of the trade-in inspection (depending on state they have to provide it to you). They price their used vehicles knowing you're going to negotiate. But you can sort-of figure out how much they put into it from the inspection. Offer them slightly more than what they put into it and don't budge.

 

[tracerbullet]

I'd suggest that you know ahead of time what your'e willing to pay for it. I found a few dealers uninterested in haggling with me, which was fine. I'd made offers higher than what some cars eventually sold for (I still watched the prices after I finally did buy a car, just to see). Once you've hit your max offer, if it is not accepted, walk away. It'll either sell to someone else for the higher price, or after a month or two you can try again.

 

[Quiksilver]

Ask questions and do your own research. Even though you know the person who had the car before they traded it in. I would do a carfax to get an idea how long they have had the car on their lot and whether it was traded around from one lot to another. As you know the person who had it before this dealership talk to the guy and ask him if it had any issues he noticed.

Physically look at the car, drive it and get a feel for how it drives. Look at the body panels, is the gap between say the hood, trunk, etc and body panels the same along each seam? Open the doors, look the the door sills; is it still the original factory color? Maybe bring a magnet with you, if their is any body damage on the car, anything that should be metal should still be metal so if the magnet doesn't stick to those areas perhaps bondo has been used in that area. Remember you are looking for anything that you can use to your advantage to drive the price down abit.

Talk with the salesman, if you know they took a 19.5K hit on it chances of them going below that is slim to none, but you if mention any of the issues you found during your inspection (but don't mention you know the guy who had it before them), mention you saw the car has been sitting on their lot for X amount of time and that you seen a similar car on another lot for X cheaper but with more miles and they were willing to throw in brakes/rotors. Basically try and haggle with them some, either trying to get the price you want or get close but with basic maintenance done to the car.

 

[Raizinman]

He told me that he got $19,500 on trade in. The dealership is asking $25,000. $5,500 seems like a pretty steep mark-up.

When a dealership is negotiating on a deal with a customer, they play all sorts of number games. Some people believe their trade in is worth $X, and instead of arguing with the customer, its better if the dealership just agrees to give $X to the customer, but then refuse to negotiate down on the new car. It's just a numbers game. It doesn't matter what the dealership gave your friend for a trade in. The bottom line is what the vehicle is worth to you. Do your homework as others have stated to find out the actual value of the car and then do a CarFax and since you know the prior owner, speak with him to find out any hidden defects the dealership might not know, yet. Perhaps that is why he traded it in??

 

[Pacfanweb]

The car is worth what it's worth. What the dealer paid for it is irrelevant.

And I can assure you that the other guy didn't get for it what he thinks he got for it.
Just about nobody does.

 

[exar333]

LOL, sounds like you should have just bought it from your friend directly.

In all seriousness, I would expect the dealership likely has some $$ in the vehicle. They purchased it, transferred ownership and (hopefully) resolved any critical issues. I would offer $22-23k and say take it or leave it. Let them know you know how much they bought it for and will offer that.

 

[Squisher]

If your state has sales tax the dealer had to pay that and title transfer fees too.. If it were here in Michigan it would be 6% sales tax or close to $1200

 

[Ns1]

If your state has sales tax the dealer had to pay that and title transfer fees too.. If it were here in Michigan it would be 6% sales tax or close to $1200

Does Michigan not have a sales tax exemption for vehicles purchased for resale?

 

[Squisher]

Does Michigan not have a sales tax exemption for vehicles purchased for resale?

Is that common? Maybe so. IDK

 

[Ns1]

Is that common? Maybe so. IDK

Typically businesses do not pay sales tax on merchandise destined for resale

 

[JulesMaximus]

If your state has sales tax the dealer had to pay that and title transfer fees too.. If it were here in Michigan it would be 6% sales tax or close to $1200

The customer pays the sales tax, not the dealer. For all intents and purposes the vehicle hasn't changed hands until it is resold to an end customer.