What's my trade really worth?

This question is asked daily by thousands of people.  Just what is your car worth as a trade in towards another new or used car.  This really isn't as big a mystery as it may first appear.  The simple answer is that your trade is only worth what someone else is willing to pay for it on the day you decide to trade it.  I'll try to help clear up this simple answer with an example.

Let's assume you have a 2002 Honda Accord LX sedan with 41,000 miles showing on the odometer.  It also has a V-6 engine with automatic transmission.  For this example there are no added options above the standard LX equipment package.

Using this information I can research the estimated trade in value at Kelley Blue Book (www.kbb.com) and Edmunds (www.edmunds.com).  Kelley Blue Book shows this vehicle in "excellent" condition valued at $11,750*.  Edmunds shows a "trade in" value of $11,702*.

To get a real feel for what the true value of this car is I did a little more research.  Going to Autotrader (www.Autotrader.com) I searched for other similar 2002 Honda Accord LX models.  The average retail asking price is $15,500*.  This is an almost $4000 difference between trade in value and the average retail price.  Wondering why you would ever trade this car into a dealer and give away almost $4000 instead of selling it yourself?  Obviously you shouldn't.  But consumers often do give away their equity every day.

This short example shows that taking just 15 minutes to research your trade's value online before going into any dealership can save you thousands.  Now you have a choice.  Try selling your car yourself or trading it to a dealer with the knowledge that you're not going to just give it away. 

Realize that all vehicles sold through dealerships have to be reconditioned.  After all, the next person buying your car wants it in the very best condition possible.  The dealership, like any other small business, also needs to have room to earn a profit on any sale.  With your new knowledge you can now negotiate your trade in value more fairly. 

While you won't get the full $4000 difference shown in this example by trading it in, you can negotiate for much more than the $11,700 "blue book value".  We used this same method to determine the trade price on a 2002 Ford Explorer XLT.  The difference between the "blue book value" and the average retail asking price on Autotrader was only $1600*. With gas prices staying high, the used Honda sedan is currently more valuable than the used Ford Explorer.  It pays to do a little research to get to know the market for your used vehicle before going into any dealership.

* Values stated were researched on 1/10/06

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