Trade in values tanked

I picked a bad day to quit sniffing glue. Enough with the fucking math lessons guys!

 

Lmao, one of many reasons I left the car business. The amount of adults who didn’t understand that their trade was worth $x, the amount they owed was added back to the amount financed on the new vehicle.

 

I think they can be... I just got a Carvana offer for my 2012 SR5 w/ 135k for $9300. Haha.

 

One point to realize, is that the new car market is taking a hit due to continued high prices, inflation and even higher interest rates. Which in turn, drives up the used car market. The problem is the private sale used market has also stayed high due to the high prices the dealerships are still asking for used. The prices for a dealership used model for my year and mileage (2012/135k) are currently at or above what I paid 4 years ago for it.

 

Wait, for real, you can get a diesel Ram for 30k? Or have prices jumped a bunch since 2019? That kinda sounds like a good deal.

 

I haven't heard good things about the cummins in the newer rams lately. PD Diesel Power on YouTube has a few videos. A newer tow pig would be handy though.

 

That sounds like a massive pain in the ass.

 

^

My grandpa was car nut like that. Granted he owned a dealership at one point, but personal cars bought and sold were well over 100 not including boats.

 

It’s not bad if you can buy and sell at the right prices to come out ahead. I’m sitting at eight different vehicles over the last four years along with four different boats and five different motorcycles.

 

Not a fan the hassle of buying vehicles (and I pay cash) buy them to use them, generally run them in the ground, fix them, and run them into the ground again. Even my friends make fun of me, since I like to squeeze every last cent out of them. Couple guys are constantly buying and selling, can’t stand salesmen and avoid it as much as possible. Think they should done away with honestly.

We used to own a construction company with a bunch of equipment, taking care of all that stuff was awful. Now try and keep it simple.

That said I may only keep my 3rd Gen for 5 years, had it for 2 now, so 3 more years to go, then upgrade to a full-size. Though my wife will probably take it. She is driving my 1st Gen that I have had for the last 20 years. She isn’t a car person and could care less, more of an appliance to her.

 

It isn’t the money that concerns me, don’t like buying (nor selling) stuff in general. Buy stuff because I need it, then wear or run it until it falls apart. I am a horrible consumer, the economy would collapse if everyone was like me. My wife has been working on me for years to buy a new truck before I purchased my 3G, “quit being a cheap SOB!” she would say. Bah…I’ll just keep fixing the old truck! Still have it too, recently put a new engine in it.

Only reason I may only keep my 3rd Gen for 5 years is because I am retiring here in few years, and it won’t pull the camper I want. Which I am not really going to get rid of it, just going to give it to my wife to drive. That is if she wants it, or off it for the new Land Cruiser for her, and that will be our run around vehicle.

 

I am going to take it this is about the 2019 Ram 1500 ecodiesel I had, yes I got it out the door tax, tag, title, dealer fees, and extended warranty for $29,000 dollars, it was a left over 2019 that had been on the lot for 10 months so it was eating them up on their floor plan and they wanted to move it so I got a once in a lifetime deal on it. If not for the DEF system and the DPF system I would still have that vehicle instead of trading it for this Tacoma, the MSRP on that Ram was $50,265 and as I said the dealer was motivated to move it off their floor plan.

 

Funny how simple this is yet so many think because the dealer paid off their old loan that they are now out from under the amount they owed, if only they would read and understand their finance contract they would find a line where that amount they owed was rolled into the cost of the new vehicle.

 

There’s also a small percent (which is still too much) who think the line showing total amount paid with interest is what the dealer is being paid. Only happens with BHPH dealers, not massive Toyota dealers.

 

OK, this makes me feel better, I thought I _really_ wasn't paying attention in class or something. Yeah, man, solid deal on that purchase. You just stumbled on it somehow or you sought out the best possible diesel Ram you could get?

 

To be fair, they are out of that loan (assuming the dealer gave more than they owed). If they didn't buy another car, they'd have some cash out of the deal.

The problem is step 2: financing another car, using only the equity from the first car as down payment, meaning probably a large loan to start again.

 

I have a neighbor who buys new fully loaded top dollar trucks every 2-3 years, about the worst time period to trade in. However, they are an oil company employed family. Both only have high school educations and made/make double and triple six figure incomes. The husband retired years ago. His wife, who manages oil field leases, could have retired years ago but they keep giving her raises to convince her to not retire as what she does is so unique. I don’t think she will ever retire. She is perfect for her job. She is the kind of women that knows how to handle herself in a very male environment. They don’t mess with her.

I have another neighbor who also works in the oil industry. He is in management. He told me of some of his employees that cannot even put together grammatically correct sentences with most words misspelled making almost a half million annually. The oil companies are doing quite well and unlike many other very profitable industries they take care of their employees. We live in a community that is about 80% percent vacation homes owned by oil company employees. However, when they are not at their vacation homes they have to live in a small desert town with normal 100 degree plus long summers that smells like an oil refinery. The oil companies know they need to pay them well. Also, all their kids went to college totally on the oil company dime. If I were them, I’d be buying outrageously priced trucks as well. I’m looking out my window in their driveway now at a new Chevy that was about $80,000. It’s not in the garage because their two $30,000 plus side by sides are in there. I will also point out they hate EVS. I asked why, rhetorically, and he said, “ I dunno, I just don’t like them.” What is interesting to me is the other neighbor drives a 20 year old Nissan SUV, the one in management.

 

That was pure luck, I went to the dealer to replace my Ram 2500 with a 1500 Ram because I no longer needed a 2500 series truck and I asked if they had any diesels and as pure luck would have it they had that left over 2019 that they were eager to move off their floor plan. I will say that the ecodiesel was problem free the time I owned it and I put 51,000 miles on it. I just don't drive it as much and DEF has a limited shelf live so it was time to go back to gas.

 

I’ve bought a lot of vehicles and there has never been a line on the contract that says that. There’s a line for trade allowance (what they’re paying for your trade), a line for amount owed in the trade if there’s a loan and a line for trade equity applied to the new purchase. The amount you owe is never rolled into the new vehicle unless you are upside down and the trade in purchase does not cover the loan balance.

 

Exactly.

Easier to conceptualize if viewed as two separate transactions.

The dealer acts like a middleman moving funds where they need to go. It's not rocket science.


Presentation of finance contract in essence using his figures as an example:

Transaction 1)

• The dealer pays you (cash) $28,000 for the trade-in but you have a $15,000 loan balance on the vehicle.
• Of the $28,000 the dealer pays you, $15,000 needs to go to the lienholder to extinguish the debt leaving $13,000 cash.
• The dealer sends the $15,000 to the lienholder from their own cash account, hence you only receive $13,000 cash in your hand.
• Or, if the dealer gave you the full $28,000 cash in your hand, you would send $15,000 to the lienholder still leaving $13,000 cash in your hand.
• The loan is paid off. You walk away with $13,000 cash, no longer a car owner, and no loan balance.

Transaction 2)

• You then decide to purchase a new vehicle from this dealer for $40,000.
• You have $13,000 cash in your hand for a down payment.
• But you are short $27,000 needed to purchase the new vehicle.
• You pay the $27,000 with new financing (i.e., $15,000 is not "rolled over", you just don't have enough cash available for a smaller loan).

"Rolling over" a loan:

Transaction 1)

• The dealer pays you (cash) $28,000 for the trade-in but you have a $35,000 loan balance on the vehicle (e.g., negative equity, upside down, underwater, etc.).
• The full $28,000 the dealer pays you goes to the lienholder. You are short $7,000 needed to extinguish the debt.
• Generally the dealer sends $35,000 to the lienholder from their own cash account, hence you receive $0 cash in your hand and owe the dealer $7,000.
• Or, if the dealer gave you the full $28,000 cash in your hand, you would send the $28,000 to the lienholder still leaving $0 cash in your hand and owing the lienholder $7,000.
  
• You walk away with no cash in hand, no longer a car owner, and a loan balance of $7,000.
  
• The buyer either sends $7,000 to the lienholder or "rolls over" the $7,000 balance into a new loan.

Transaction 2)

• You then decide to purchase a new vehicle from this dealer for $40,000.
• You have $0 cash in your hand for a down payment.
  
• You need $40,000 to pay for the new vehicle. You also need $7,000 to extinguish the old loan.
• Financing for $47,000 is obtained, $40,000 to purchase the truck and $7,000 to extinguish the old loan (i.e., $7,000 is "rolled over").