Which is a better option? To trade in at a dealership or try to sell it privately? On the one hand, I could probably get more by selling it privately rather than trading it in.

However I'm unclear how the whole trading in thing works. According to the Mitsubishi dealership my car would be worth $10,500 if not for the fact I put in a Ralliart gauge cluster with more than 9,000 extra miles on the odometer. Since he classified my car as "unknown milage" I was told the trade in value would be only $8,000. I then went to Subaru without telling them it's unknown milage but they also would only take $8,500 for it. I owe my bank about $8,000 so I'm pretty much even which is better than upside down.

But anyway, when trading in, and correct me if I'm wrong because I've never done it before, the dealership takes your car and cuts you a check for what you owe to the bank. But then they tack on the value of the check to the new car. So for example, you want a $20,000 car, they give you $8,000 for your trade in, but you end up paying $28,000 for the new car.

OR, if I try to private sell it for $9,000 I can give $8,000 to my bank to pay off my loan and pocket the extra $1,000 as part of the downpayment on the new car.

The new car incase anyone cares is the 2006 Subaru Impreza WRX. Although I wouldn't have a problem "settling" for the 2.5i since it's better than the Ralliart and way better than my ES.

 

Sounds like your in a bit of a predicament. I think in your case selling outright will be a better idea, although it's more of a hassel you should get more money.

As for trading in I didn't have to do anything because I used the same company to finance. I was upside down so i I ended up tacking on the extra $1000 onto my loan.

I was in your situation except I was upside down in the loan and I didn't have the cluster issue. Maybe when you did the switch if you would have had the dmv document the mileage that wouldn't be an issue. The subby dealer could just be low balling you, I didn't get much more than 8,000 for my es, I think I got $8,400.00 in August.

Did you test drive the ralliart and Imprezza?

 

I work for a dealer...here's how it works.

You trade in your car. They appraise it based on condition, mileage/year, options, color (popular or unpopular), etc, and they tell you how much they will give you. If if it's lower than what you owe, here's how it works, all in dollar amounts:

New car = 20,000 you owe = 10,000 they give you 8,500 you wrap the difference into your new car...so in essence before financing, tax, title, license, documentation, etc, you end up paying 21,500.

If you owe less than what they give you, here's how it works.

New car = 20,000 you owe 10,000 they give you 12,000 you subtract the difference from the value of the car, before all the aforementioned items and you pay 18,000.

Now. figuring the two out using financing, here's how it goes:

Upside down (example 1) in the loan: 21,500 + ~1000 for tax/title/doc = 22,500. Figure the usual new car loan interest percent at 5.9%, you multiply 1.059 (the percent plus the total of the car) * 22,500 = 23,827.50, the gross price of the car. To figure out monthly payments, you divide that by 60 months (typical for a car loan) and you come up with 397.25 a month.

Right side up (example 2) in the loan: 18,000 + ~1000 for tax/title/doc = 19,000. Figure the usual new car loan interest percent at 5.9%, you multiply 1.059 (the percent plus the total of the car) * 18,000 = 19,062. To figure out monthly payments, you divide that by 60 months (typical for a car loan) and you come up with 317.70 a month.

Of course, you can use any period to pay off the loan (24, 36, 48, 60 or 72 months) but you get the idea, and this doesn't include putting any money down. Usually dealers want enough to cover taxes.

If you can sell the car outright for more than it's worth, do it. You can then use what you make to pay off the bank and start fresh. All you would need is a down payment. If you can get more for the car than what it's worth, that's another route, then they pay the bank off and you don't have to worry. The last resort is if you owe more than it's worth, which is my case. I refuse to buy a new car until mine is worth more than I owe...that's actually the first example I used.

I hope this helps you out!

 

Excellent explanation. Couldn't have said it better myself

 

Honestly, it's far more benefitial (sp?) to sell to a private party. Not only will you get more in the long run, you will get 'cash'. Trading in a car isn't really 'cash'...it's more like credit. It's kind of like trading in games at EBgames -- they give you MORE credit than cash, because they make out much better that way. My .02

 

I agree with you because you can make more money off of it than you can trading it in. You can then pay off the bank and have money left over for a down payment. Some people just don't like the hassle of dealing with private parties.

 

Always sell instead of trade if you can, our Lancers aren't worth **** once you drive them off the lot, actually worth less than most new cars once driven off the lot, so get the most you can by selling outright. I just checked kbb, and I paid $20k for my loaded Lancer with all packages and options just a little over 2 months ago, and kbb says it's only worth $12.5k on a dealer trade. That's just over half its value in only 2 months

Oh, and might I add excellent choice going with the Subaru, even the 2006 2.5i, which fully loaded is $1k less than I paid for my Lancer, with awd, 4 wheel disc brakes, and abs, and can spank our Ralliart while we are on the subject too. They also retain their value way more than our Lancers do. Subaru is most likely my next car, either the 2.5i or the wrx. Hmm, now if I can just get someone to total my car so my gap insurance can pay it off
I priced used Impreza 2.5 rs's with 50k on the odometer at more than one can buy a new Lancer ES. That ought to tell you how well they hold their value.

 

My car was 11,500 with 5000 on the odometer...that was in August of 2004. My car is worth 8500 and falling and I owe 10,000 and what seems to be climbing. I would go with a Subie, too, because my friend has a 2004 Impreza 2.5RS and I drove it. Even with an auto (blah) it's nice and quick.

 

Yeah, the resale value of Subaru is great. Even if I have to get the 2.5i I can trade it back in for the WRX. God knows I'd love a turbo for a change. Plus the WRX appears to have more aftermarket parts for it than the 2.5i.

First though I'd have to be close to my down-payment target before putting up the sign. It would suck to actually sell my car before being ready to buy a new one.

Any help on what the sign should include to help get it to sell? I figure pointing out the ES's great milage is a good point in this day of expensive gas.

 

Also a flyer to put up at various places in town.

 

Trust me, you won't sell it that fast.

 

If you price it fair to market, you should be able to sell it yourself.

 

"According to the Mitsubishi dealership my car would be worth $10,500 if not for the fact I put in a Ralliart gauge cluster with more than 9,000 extra miles on the odometer."

Re-install your OEM guage cluster and get what your car is worth.

 

For the flyer, you might want to show what suspension and performance upgrades are included in the car. If they're minor, show and tell that. Some people like a cars engine and underbody to be stock, so tell them what they're getting. At that price, you aren't going to sell it that FAST. Many people (including myself) look for great deals on cars, then pick them up. IMO, if you put it in the $9,000/OBO range, it'll sell much quicker. Good luck with the sale. My .02

 

Well I'm not expecting to sell it in a week. To get the down payment I want for the Impreza though it will take several months.