Part-exchanging

Part-exchanging for a New Car

If you have a used car you want to part-exchange for a new one, it's no good getting a decent discount then giving it all back by accepting too little for your trade-in.

Be very well aware of what your existing car is worth. Compare it with similar models of similar age and mileage which the dealer has up for sale, and don't accept less than £1,500 or 15% (whichever is the greater) less than the sticker price on these cars. This £1,500 or 15% may sound a lot, but remember the dealer will usually negotiate downwards from these sticker prices when selling his used stock.

Also remember, what you get for your part-exchange is not the most important factor. The 'cost to switch' is. Always compare the total financial outlay involved in one deal compared to another.

For example, dealer 'A' has a new Mondeo that lists at £15,000. He offers you £4,000 for your part exchange, but no discount on the Mondeo, so the cost to switch is £11,000.

Dealer 'B' has a new Laguna that lists at £15,000. He offers you £3,500 for your part exchange, plus £1,000 off the price of the Laguna. The cost to switch is therefore £10,500, so the Laguna is £500 cheaper than the Mondeo even though you get less for your part exchange.

Is the Mondeo worth £500 more than the Laguna? Or can you use the Laguna deal to chip £500 or more off the price of the Mondeo?

This is the way you should be thinking. It's not hard, is it?

Part-exchanging for a Used Car

The same rules apply as when part-exchanging a used car for a new car. But be doubly vigilant when part-exchanging for a 'nearly new' or used car on finance. One well-known dealer offered two deals on his used cars. 'Deal 1' was a straight price, itself very competitive and negotiable if you found a cheaper deal for precisely the same make, model, colour, age and mileage. 'Deal 2' involved a price usually well below what you would pay at auction for the car. But the deal was subject to a minimum £500 part exchange allowance, payment of £99 and finance on the dealer's terms. The 'Deal 2' package was designed to be irresistibly tempting and the truth is it wasn't bad if you did not mind tucking yourself up with fairly expensive finance. Even when you compare the true total cost of the deal (as explained under 'BUYING NEW') you will probably come out better off than with a deal from a franchised dealer. Just know exactly what you're getting into.

Selling to a Dealer

Unless the car is highly sought-after and selling for an 'over', this is a desperation tactic.

If the car is relatively ordinary and the dealer wants stock, he has to build in a margin on top of whatever he offers you and has to include in that margin his own insurance that the car doesn't have some secret history you and HPI don't tell him about.

If your car is over the age of the dealer's stock, then the dealership may not make you an offer, but one of its salesmen might. These sort of offers are often derisory. Years ago a reader was offered just £1,000 for an immaculate 50,000-mile BMW 320i cabrio. I told the reader to do what the salesman was planning to do with it. Advertise it in Top Marques for £4,000 and be prepared to accept up to £500 less. He did, and got £3,750.

Okay, you can't do this if you're about to leave the country. But if you are all set to emigrate, don't be too greedy. Advertise the car for a tempting price, and take an offer. Don't hold out for more money until the day before your plane flies out or you could end up forced to virtually give the car away.

And avoid car buying services, advertising promises like, “We buy your car. Top prices paid.” What invariably happens is that you settle on what seems to be a decent deal and cancel all your other options. Then, when you finally deliver the car, the buyer finds something wrong with it and offers you £2,000 less than the promised price. If you've got your bags packed and will be getting on the plane to Australia in 8 hours time, you're stuffed. Which is exactly what the buyer had planned.