Tips on Buying Cars: Tradingt In Two Cars, blue book value, financial changes

Question
We currently have a 2006 Avalanche and a  2006 Silverado because of financial changes we  were considereing trading both in for one vehicle.  Both trucks are being financed.  Isa this a good move on our part

Answer
Good Morning Dennis, and thanks for your question.

What you have to keep in mind is that any new vehicle depreciates in value when you take ownership, which I'm sure you already know. Depending on any down payments you've made, you can find yourself in a negative equity situation owing more to the bank than what you can sell your vehicles for.

The problem is compounded if you trade to a dealer. Dealers are in the sales business, typically pay wholesale (or less) on trades such as yours, and resell at market value. Using a base 2006 Silverado, short bed, 12,000 miles, and in excellent condition, www.kbb.com gives these numbers:
$21,430   Blue Book Value
$17,515   Private Sale By Owner
$13,725   Trade-in

Keep in mind that these are not what you will necessarily get, but are generic numbers for a base model, as I stated. But, they do tell you that you can typically expect to receive a lot less if you trade than if you sell a vehicle yourself.

To your question, "Is this a good move on our part?" Since you're considering the change based on recent financial changes, it can be good if you get enough money on your vehicles to pay off the existing loans. If you don't, then you're going to be paying money on vehicles you don't have anymore. This is ok with dealers: they'll offer to role any left over balances into your new loan, but it's the same problem, you're still paying for something you don't have.

My suggestion is that you find out what the dealer will offer you, and compare it to what you may be able to do if you sell the vehicles yourself, before making a final decision. Don't let the dealer pressure you into a decision--take some time to work the numbers and think it through. When you do make the decision, it will be based on all of the facts as you know them, and not because the dealer wants to make a sale.

Good Luck, Dennis!

Regards,


Ron