Johannesburg - If you have your heart set on buying a new (or pre-owned) vehicle and you want to trade your old one in on it, you might be in for a surprise.
While auto dealers might be keen to put you into the driver’s seat of a new vehicle, getting the value you deserve for your old car as a trade-in might put a sour taste in your mouth.
I know this because I recently had an itch, to jump into something smaller and sportier (nothing too fancy). After identifying a small hatchback of choice, I booked to have my 2016 Honda Accord 2.0-litre Elegance Automatic assessed for a trade-in at an OEM dealership in Randburg.
I arrived at the dealer a little earlier than anticipated, both to test drive the new car I was interested in and have my car evaluated, so I rummaged around their used car area where I spotted an exact model as my car. It was silver, though, (my car is white) and it had higher mileage on it, and it also had a few more scratches on the bumpers and doors.
Priced at R299 000 on their used car floor, I thought I would surely receive a decent trade in on my car. I also researched the trade value of my car prior to making an appointment to test drive the new one, so I would know if the dealer was trying to low-ball me with an offer.
The inspection of my car went well, and the assessor commented on how neat it was. ‘Yes’, I thought, ‘this is going great’, ‘I’m surely going to get trade or close to trade on my car’.
I then jumped into the new car with salesman in tow and off we went on the test drive, chatting about cars and the merits of the one I was test driving.
Upon returning to the dealership, the used vehicle assessor asked me to join him in his office so we could talk about doing the deal, so I said sure, having thoroughly enjoyed driving the new small car I was interested in.
“We’re looking at R185 000 on trade on your car,” he said.
I was shocked. According to my research, which included securing a trade and retail value report from Transunion, my car was worth R285 000 on trade-in. The dealership wanted to offer me a full R100 000 less.
Of course, car values are only indicative, and a used car will only be worth what someone wants to pay for it, but the discrepancy in the amount was a genuine eye-opener. It put me off from wanting to buy a new car.
I asked the assessor why such a low offer, and he said numerous things; it’s not a popular model, we don’t really move big cars, we have one in stock.
That’s when I said that I did see the one they had in stock and it looked to be in much worse condition than mine, yet it sold for nearly R300 000. He said, well, take it or leave it. So I left it.
Perhaps, with a little more transparency, or a little more explanation (and education on my part), I would have understood why they wanted to give me R100 000 less than what my car was ‘worth’. And, it seems I’m not the only one who has been in this sort of scenario.
According to a car owners survey by CompareGuru, 1000 vehicle owners in South Africa have highlighted the following concerns when selling or trading-in their vehicle:
1) Defining the value of their car
2) Negotiating the price
3) Understanding the paperwork
4) Ensuring safe payment
5) Dealing with time wasters
Selling and trading-in vehicles can be pretty stressful then, because it’s an area most of us don’t really know much about, and one can’t help but feel like you’re on the back foot from the start when trying to jump into a new vehicle.
Trading-in a car doesn’t have to be stressful, though, according to Michael Muller, Managing Director of CarZar.co.za. He believes that you should get at least two comparative prices for your vehicle. “It will require a bit of legwork, but the effort will be worth the financial return,” he notes.
So how do you get prices for your car? You can go online, he says: “There are a number of South African car buying service websites that – based on the model, mileage, age and condition of your vehicle – will be able to give you a reasonably accurate estimate of its value,” Muller says.
But, he also advises that you get your vehicle physically assessed too. “No offer is final until the buyer or dealer has inspected your vehicle, and often a vehicle is further from perfect condition than you might realise,” he says.
It’s advised to be realistic in your expectations, too: “Remember that a dealer in particular has to incur a lot of costs to sell your car again so you’re not going to get offered the price that a model like yours is being sold for online or on a dealership lot. You can, however, use those retail values as a benchmark as it should be roughly 20-30% more than the trade-in price you can expect.”
He also says that you should ‘know your car’ before you try to trade or sell it. “This may seem like an odd piece of advice, but you’d be surprised by the number of sellers who get this wrong. Before you do your assessment, make sure you know what model derivative you own.”
To put this into context, in the last decade you could have bought one of 16 000 different new-car make and model variants, so it’s important to make sure you know exactly which derivative you own to ensure you know its value.
You also need to know what ‘condition’ your vehicle is actually in. “This means knowing its service history and what accident or mechanical repairs it’s had done to it. A physical assessment will likely pick this up,” Muller says.
You can have the condition of your vehicle independently evaluated at a Dekra test centre.
The centre will provide you with a report on the condition of your vehicle. “This may cost you a few hundred rand, but it could save you thousands when you are negotiating with a buyer or dealer. You’ll be able to push back on any attempts to low-ball you by declaring there are no problems with your vehicle based on your assessment of it at the centre,” he adds.
As a parting shot, Muller also says that you shouldn’t fix bumps and scratches on your car, particularly if you’re looking at trading it in at a dealership.
“There are two main reasons why it is best to let a dealership refurbish your car themselves. Firstly, it will cost them far less because dealerships will have industry contacts to get panel beating done and tyres replaced for a lot less. The price the dealer offers you is unlikely to warrant the cash you’ll spend on fixing it.
"Secondly, dealers like to know what they are buying and they don’t like to see signs of work done without knowing exactly how serious the original damage was,” he says.
If you’re taking your car in for a trade-in evaluation this weekend, be honest about its accident history (if any) and ensure you only deal with legitimate dealers or businesses. “Professional buyers will be able to see if the car has been in an accident, regardless of what you tell them, and not being honest about it will only make them nervous about what else you might be hiding,” Muller concludes.
Keep these insights in mind when shopping for your next car and you might be able to get a decent trade-in price for your old one.