Motors

Be realistic: know the true value of your trade-in

Almost inevitably, people think their cars are worth more than they really are

There are some good deals around on the Ford Focus, Skoda and Toyota

Wed Jan 20 2010 - 00:00

Almost inevitably, people think their cars are worth more than they really are. Realising how the market has changed will enable you to strike a good deal, writes Donal Byrne

THOSE WHO don’t qualify for the scrappage scheme but who still want to change their car this year will find they are not at as great a disadvantage as they might have thought. For people who might own a car eight or nine years old and are below the scrappage threshold, the reality of the current market means there is still a lot of choice and excellent value. Their one challenge, however, is the value of their trade-in.

At the moment, car dealers are welcoming cash buyers with open arms, but those hoping to trade in much older cars present a greater challenge.

Almost inevitably, people think their cars are worth more than they really are, and are not really familiar with the way the market has changed, particularly in the past year. They expect to get a fair price for their car, but they also expect a bargain. What is called their “cost of change” is often much greater than they think.

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Buyers need to remind themselves that while the value of their older car has fallen very significantly (a nine-year old Fiat Punto is worth about €1,500 in the trade, and a Ford Focus of the same vintage is worth about €2,100), so too has the value of much more recent cars. It is the old principle of swings and roundabouts. You may get much less for your trade-in, but you will also get a better deal on the newer car you are buying.

Some dealers have recently been advertising that they will take trade-ins to counteract the poor experience of those who were simply turned away from garages without even an offer on their car. This had been a common experience in the past six months, as dealers desperately tried to offload their second-hand stock. Now, many cars have been sold on, but dealers are still exercising caution about what they take in.

To get the best from your deal it is important to remember that when a dealer makes an offer on your car, he is considering two critical components of the deal he is entering into. The first is how much he can sell your car on for in the trade and the second is how much of his profit margin he is willing to cut on the price of the car you are buying. That is how he arrives at his trade-in price.

The key to success in getting a good deal is being realistic about the value of your trade-in. Never in recent times have dealers been so desperate to sell cars, and margins have been slashed. A car sitting on the forecourt costs money for every day it is there, and where dealers might previously have held out for, say, a margin of €3,000, that margin may now be cut by well over two-thirds.

To illustrate what is available at the moment and what good value is out there, I have taken a sample of cars that have a proven record of reliability and that would suit individual and family drivers. A 2006 Ford Focus LX diesel with only 59,000km on the clock, a full service history and extras such as air conditioning, is on offer for €11,995. An 05 1.4 petrol with 49,000km is on offer for €9,450.

A 2006 Focus C-Max 1.6 petrol, which is a very good family car, with only 22,000km, is on offer for €11,950. A Skoda 1.6 petrol Octavia with 52,000km has a price of €8,950, and a 1.9 diesel version of the same car (and same year) is on offer for €11,950. An 05 Toyota Yaris with a 1.0-litre petrol engine with only 43,000km is on offer for €8,450. An 06 Yaris with the same engine and 33,000km is on offer for €8,995.

Bargaining is essential, and these prices can be shaved considerably if you are shrewd. Do not rush into the first deal. Shop around and be aware of the fact that there are literally thousands of cars to choose from. If you feel you are not getting a fair deal, walk away. Visit or phone as many dealers as you can and then you will have a good idea of what your trade-in is actually worth.

Finally, beware of the sharks. The internet is awash with questionable traders. My personal requirements would be for a full service history, a reasonable warranty and a dealership that is an established premises rather than a Portakabin.