What is the Trade-in program in a car dealership: conditions, advantages and disadvantages, registration

What is the trade-in? To give the car in trade-in or to sell it by yourself

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When there is a need to replace the car, there is a question of what to do – sell on your own or surrender the car by trade-in . In the first case everything is clear: we put the car on the board of announcements and wait for calls from buyers. The second question is what is trade-in, is it profitable, and what are the pitfalls. We looked into the question and found the answers.

What is trade-in?

Trade-in is widespread in Russia, but those who have never encountered it do not know what it is . Trade-in is the exchange of an old car for a new one (another). By new we mean both used and new car . You can sell the car on the program in a car dealership or dealer center.

The advantages of trade in are :

• Saving time and minimum hassle with the sale of cars. The owner does not need to deal with the pre-sale preparation, make and place ads on the boards, take calls, go to shows and haggle with the buyers. Exchange in a car dealership can be delayed, for example, due to lack of necessary documents. In other cases, the deal lasts no more than one day.
• It is possible to buy a car for trade-in either in cash or on credit. In the latter case, the cost of buyback will be counted as a down payment.
• Another pleasant bonus of trade-in is a discount for a new car. Its size varies depending on the class of the car. You can save from 10 to 60 thousand rubles on Budget cars, medium-class cars – from 50 to 150 thousand rubles, premium cars – up to half a million.

• Underestimated value of an old car. Below we describe how cars are valued in trade-in, and why the cost is lower than the market average.
• Limited choice of a car. You can choose a car only in the showroom where the old car was handed over, and trade in may not apply to all models. For example, KIA currently offers an exchange only for the K5 and Sportage with a 2.4 liter engine.

When exchanging a car for a used one, there is a risk to buy a problematic specimen, and this despite the fact that the salons check the cars before accepting them for trade-in. Therefore, before you sell an old car, it is worth checking your favorite car through a special service.

Here is an example. For sale is a “black beautiful GELIK”, year 2000. The seller’s card lists a car dealership. “Not rotten, not rusty, interior in good condition, the frame is readable,” the seller writes in the comments and sends by those who are ready to take the car for a million rubles.

We run the vin license plate of the GELIK through the service avtocod.ru and see a few problems at a time.

The mileage was changed three times.

Repair works were calculated based on one of the accidents. It took more than 760 thousand rubles to restore the car.

“There are 12 unpaid fines for almost 5,400 rubles.

The bailiffs initiated enforcement proceedings against the last owner. Inspectors may impose registration bans on the car when registering it. (The report incorrectly indicated the total period of operation of the car provided by the source. Most likely a mistake was made at the registration of the car in the State Automobile Inspection. – Editor’s note).

It is better to refuse from purchase of a Helik not to make troubles.

What kind of a car can be handed over to a trade-in

The requirements to a car from dealers are different. Audi, for example, accepts all brands and ages of cars, except for Chinese and Russian, Mazda – car premium brands no older than 5 years and Russian no older than 10 years, KIA – any brand of cars with a period of ownership of not less than 6 months at the time of delivery. That is why before exchanging your car you need to find out how the trade-in program works in this or that automobile salon, and choose the appropriate offer.

The list of basic requirements to the cars accepted for trade-in is the same, they are :

• Good technical condition;
• Complete set: all doors, glasses, details;
• Absence of serious external damages, including VIN;
• Clean history: no mortgages, arrests, restrictions, accidents, twisted mileage, etc;
• compliance with the serial numbers of components and units specified in the PTS;
• Availability of all documents.

In addition, the car must be legally imported into Russia and registered to the person who wants to pass the car in trade-in. Accordingly, if the TC does not meet these requirements, the shop will reject the application.

So, what kind of cars are not taken in trade-in?

• Technically defective;
• With serious external damages;
• with incomplete equipment;
• With legal problems (arrest, pledge and so on.);
• with incomplete set of documents;
• “battered” and “sunk”;
• with discrepancy of real numbers of units and assemblies with those in the certificate of registration;
• illegally imported vehicles not registered in the name of the person who is going to use the program.

The set of required documents is also different in the salons. It is obligatory to provide a passport, vehicle registration certificate, OTC and a power of attorney, if the car is reconditioned not to the owner.

How does trade-in work?

So, we found out what is trade-in, and now let’s analyze how trade in works.

• The buyer brings the car to the showroom for diagnosis and appraisal.
• If the car suits the conditions, the company carries out diagnosis and evaluation.
• After checking the company voices the cost of the old car and the amount of surcharge for a new one.
• If the client is all satisfied, he chooses a car and enters into a contract of sale with a salon. ACP is made twice. On the first company redeems the old car from the client, the second – sells a new one. Also the salon draws up a deed of acceptance of the car. As a result, the buyer is left with three documents: two contracts and the act. The transaction can also be formalized by the barter agreement with the indication of the old car cost and the order of additional payment for a new one.
• If the chosen car is more expensive than the old one, the buyer pays the difference or takes out a loan. If it is cheaper, the dealership compensates the difference.

After the deal is completed, the salon collects the car and takes care of the sale itself.

When you can give a car in trade-in

Trade-in – saving time, but not money. As a rule, the appraisal in the car dealership is 10-30% lower than the average market value. This includes the risks of a long sale, bargaining power of the client for further sale and payment of interest to the bank (most car dealerships buy cars for credit funds). That is why there is no sense to give an old car in trade-in without a discount for a new one. But even if there is one, you still need to count. If you make it out, give it back.

Thus, car owner Irina Serebrennikova bargained for her old car at trade-in.

– “I bought a Solaris in 2016, they had a trade-in discount of 50 thousand,” she says. – At that time I had an old Kalina, which was valued at 190,000 rubles. In other words the total profit was around €240k. I tried to sell it myself. I put it up for 250, but there were no calls for a week. A couple of times they called, offered 200, then 210 thousand, so in trade-in, handed over, I did not bother. I found it profitable.

Sometimes managers offer additional terms, for example: “We will give a trade-in discount if you take the car on credit”. This means that either there is no discount (it is for the credit, and the manager has a plan for the accepted cars), or the representatives of the car dealership want to sell the credit. If you do not want to commit, pass by such sellers.

How is the car valuation at trade-in

When a car is accepted it is first examined externally, “checked” through the traffic police and the approximate value is determined. How is a car evaluated at trade-in? The cost of the car depends on its condition and average price list on the market. The average price tag should be formed as follows:

• The manager goes to the bulletin board;
• Set the criteria – year, engine, gearbox;
• creates a sample of several pages;
• Add up the prices and divide them by the number of selected cars and calculate the average cost.

In fact the sellers take ads only from the first page, and the difference can be substantial. That is, in the middle of the market the car, for example, costs 600 thousand rubles, and you will be told – 400, and even from this price will calculate the price reduction, which depends on the year of manufacture, condition of the car, mileage, number of owners and other parameters.

The least of all, the salons reduce prices on budget cars.

– With low-priced cars like Polo and Solaris, the year and mileage influence the decrease of prices the most. These cars sell quickly, the risks are minimal, so they have little reduction, – says Yevgeny Chirkov, manager of trade-in department. – With premium cars we take into account the configuration and engine. They already have a big reduction in value. Here the risks are high, and the cars sell for longer. Sometimes we even lose money. Recently we sold a GLK, which had been standing for almost a year. Initially we gave much to the client, in the end we lost 200 thousand rubles.

How do car dealers cheat during diagnostic examination?

The machinations that help to bring down the price tag of the acceptance, as a rule, are committed at the diagnosis. If possible, be present during the inspection, otherwise they will find a bunch of “defects” in the car, which in fact are not there. That is exactly the situation Sergei Zaytsev got into.

– I had a Kalina in 2008. I used to drive it very little, mostly to the cottage, so I covered only 33 thousand kilometers during 11 years, – says Mr. Zaitsev. – I planned to exchange it in late spring or early summer 2019 for Vesta through trade-in. We have only one official dealer in our city. I have always been serviced there, and I also took my Kalina there.

In April last year, the dealer sent me a text message about a free diagnosis. I arrived, they replaced the silent blocks and the dust cap, and they said everything else was perfect. While the car was in the service, got it appraised. Was given for it 100 thousand rubles and 20 thousand rubles discount for trade-in.

At the end of May I went back to the dealer to exchange my Kalina for a Vesta. They diagnosed the car and found a whole list of problems: both granaries needed to be replaced, stabilizer rods, rear shock absorbers, and door handles. As a result, the price was set at 80 grand. That is, two months ago these problems didn’t exist and now they appear. I didn’t want to go anywhere, waste time and nerves again, so I agreed to take it.

What to be afraid of when signing a contract

If after the technical inspection you come to an agreement, the next step is the signing of the contract. Here you need to be very careful. Some dealers prescribe hidden conditions in the document, for example, additional commissions for money transfer.

Sometimes car dealers do not give the contract of purchase and sale to the client at all, and it is wrong in the end. The contract is needed in order to remove the car from the registration in the traffic police in 10 days after the transaction, and not to pay taxes.

So be sure to demand a contract and before you sign something, read the document. By law you can terminate the contract, but even here you are in trouble.

– If the contract is concluded between an individual and a legal entity, – says Alexander Sumovskiy, lawyer of Avtocod.ru, – there are no particular problems in canceling the contract. It is the right of the consumer by law (Article 32 of the Consumer Protection Act). However, the individual will have to pay the expenses incurred by the dealership. There may be different variants of these expenses, for instance presale preparation.

Is it worth buying a car in trade-in?

Statistically, most cars leave for a new buyer within a month. Trade-in is resorted to by those who want to sell the car quickly and without nerves.

But I still recommend starting with a self-sale. This way you will test the market, find out if there is interest in your car, and come to the dealer already prepared: you will have arguments for bargaining, if the showroom will estimate the car unfairly.

And it is possible and even necessary to bargain! Managers almost always leave a margin, and if the client is not satisfied, increase the price of reception.

Definite advice – surrender the car in trade-in or sell it yourself – is difficult to give. Calculate all options: it is profitable in both ways. Much depends on the discount, the specific salon, the car, and of course, on your patience. When surrendering to the trade-in, contact a trusted dealer and carefully read the documents.

Author: Igor Vasiliev

Did you have an experience of handing over the car in trade-in? How did it go? Tell us your story in the comments.

The Trade-in system – the pros and cons of this service

Trade-in as a service of the car dealers at the world market is known for quite a long time, but in our country it is only gaining popularity. This procedure is aimed, on the one hand, at increasing the sales of new cars, and on the other hand, it allows you to make the process of selling and buying a new car much easier and faster. This procedure should be mutually beneficial for both the car dealership and the owner of the vehicle, but applying for this service, you need to be well aware of what this system is and what its advantages and disadvantages are.

In this article we will try to give the detailed answers to common questions arising with reference to this topic:

1. What is a trade-in car in a car dealership.
2. What are the advantages of this system.
3. Negative points .

Trade-in

Trade-in is a system for exchanging an old car for a new one with a procedure of deducting the cost of the old car from the price of the new one being purchased. This process usually takes place according to the following scheme:

1. Evaluation of the old car. The car owner goes to a salon or a dealer working with certain salons to have the car appraised and to clarify the possible amount of the car sale. Experienced appraisers conduct a complete inspection of the car, assessing its appearance and technical condition. The owner is offered a certain amount for which the salon is ready to take the car against the price of another car from the salon.
2. Selection of a new car. The buyer has to decide on the car to be purchased. It can be a brand new car or a used car, which was previously prepared for sale by the employees of the center after the same Trade-in procedure.
3. Payment for the new car. The car owner and a representative of the auto center sign a contract of car sale, and the buyer pays the necessary sum for the new car with the deduction of the sum of his old car.
4. The buyer drives home in the new car, transferring all rights to his car to the representative of the salon. Since this moment all the problems on pre-sale repair, sale, deregistration in State Traffic Police are the full responsibility of the salon.

Main advantages of Trade-in

There are always vehicle owners who prefer to change cars quite often – this is an ideal option for this category of drivers.

This service is most beneficial for car owners who want to change their old car for a new one as soon as possible. It is very important for them not to be without a vehicle even for one day, which is completely impossible in traditional transactions to first sell their car and then buy another one. It may take more than one day and sometimes more than one week to complete a sale under a simple scheme. The trade-in system, in its essence, guarantees complete saving of your own time.

In addition to the fact that the buyer can come to the showroom with your car, and just a few hours later leave with a new one, the service provides a number of other positive aspects, namely:

1. All diagnostic examination to clarify the condition of the car salon always conducts at its own expense.
2. Salon staff independently conduct pre-sale preparation of the car and looking for a buyer. The former owner of the car absolutely does not care how much money the salon will spend to put the vehicle in order and how long they will look for a buyer.
3. Often the salon will offer to use the bank’s loan services if any amount is not enough. The buyer will not need to contact the banks themselves and wait a long time for the necessary decision.
4. All the procedures of the transaction will be completely clean and transparent. The car owner can not be afraid of difficult situations.

Negative aspects of the system

Like all others, this system has a downside. By giving the car for appraisal, you should understand that the salon will offer a somewhat low price. This is due to the fact that the salon will have to spend money on the pre-sale preparation of the car, which may require a considerable amount of money for the evaluation, restoration and sale of the car to its employees. This will also include costs for storage of the car and for the necessary paperwork and insurance policy. In addition, the car dealership is a commercial structure, and it is important for it to make a profit.

Thus, by applying for this service you should be completely ready for the car to be valued at 10-15% lower than its sales value on the market. If the appraiser offers an even lower payment, you should think about whether the time savings are worth it.

The next thing you should pay attention to is a rather small choice of car models. Given this, before you go to the salon, you should find out what cars will be offered to you.

The registration procedure

If you decide to apply to the salon with the Trade-in system, you should find out exactly whether you can take advantage of this program, whether your car corresponds to this program.

The Trade-in program presupposes a certain package of documents.

• A document confirming the identity of the car owner – passport; ;
• STS – certificate of registration;
• Inspection coupon;
• All sets of keys – 2 or 3;
• Power of attorney for the car (this document is necessary in case if it is not the owner who turns to the salon).

You do not need to bring an agreement on the purchase of the car or a deed of gift.

In addition, the salon has its own internal requirements for the accepted car. Most often, when evaluating the car for trade-in the following criteria are taken into account:

• the vehicle must be in full working order;
• The age of the car can’t be more than 10 years. Sometimes the requirements are up to 5 years old and the mileage must not exceed 100 000 km;
• not all models are accepted by each showroom, demand is very important;
• The car must have a good exterior condition. During the evaluation, the salon representative will note every problem spot – a chip, dent, or scuff, and it will definitely affect the price.

The full registration of the car with the transfer of all ownership rights takes place in the salon.

How not to make a mistake with this service

If you decide to use the trade-in system, you should carefully select a car dealer. Here it is important to follow a number of rules, and everyone will be satisfied with the deal.

People who use this system recommend applying to the salon, in which the car was previously purchased or in which cars of your model are sold. Here, there is a much higher chance of getting a maximum monetary valuation for the car and a minimum chance of getting rejected for this service.

In addition, before you go to a salon for an appraisal, you need to verify the value of your particular model on the car market. These actions will allow you to evaluate the adequacy of the proposed value and avoid unnecessary bickering.

Another important aspect is the fact that automobile salon offers not only new cars, but also the automobiles accepted earlier for Trade-in according to this system. These cars are already pre-treated and have a warranty from the showroom. This serves as a guarantee of full serviceability of the car, which allows using it for a long time without any problems.

Alternatives

After studying all the advantages and disadvantages of the trade-in system, the owner of the vehicle will decide whether to use this service or to try alternative options. You can sell your car on your own, using the sites at auto markets. In addition, you can submit ads to various newspapers or use the services of intermediaries. Most likely, these options will allow you to get a little more money, but it will require a lot more time and nerves, and the chance “to get” on scammers of various kinds, of course, is also greater.