Fair Market Value Vs. Trade-In
Fair market value is what a willing buyer will pay a willing seller. Trade-in typically refers to a car buyer's used automobile. Usually a car owner must decide whether he should trade in his used vehicle when purchasing a new automobile or sell his used car as a separate transaction. A trade-in will reduce the purchase cost of the new car.
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Fair Market Value Concerns
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Selling a used car on the open market will approximate the fair market value. When selling a used car, the customer should consider open market considerations. Usually, the process of selling a vehicle on the open market takes more time than a trade-in.
Advertising
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Selling a used vehicle on the open market involves advertising it in a local newspaper or the Internet. The customer will need to pay for advertising and meet with potential buyers. Often a seller will receive more money for his used vehicle by selling it himself rather than trading it in.
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Weighing the Time Involved
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If the customer doesn't have much time, he may prefer to trade in his used vehicle. Usually the dealer will not give the customer as much for his used car on a trade-in as he could get on the open market. The customer must weigh the time involved in selling his vehicle on the open market. After meeting with several potential buyers, the customer will get a feel for what his used car will bring. The more time the customer has (at least several weeks or a month), the better off he'll be.
Better Deal
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If the customer sells his vehicle for fair market value, usually he can make a bigger down payment towards the new car purchase. If the customer is patient, generally he'll be able to strike a better deal with the dealer.
Study the Market
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The wise customer studies the market. He checks other automobile dealers' prices. Taking his time, he will see what similar new and used vehicle prices are. The more information he has, the better the deal he's likely to make.
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References
- Photo Credit the future is here image by John Fatuzzo from Fotolia.com
