Tips on Buying Cars: trading down, avalon xls, diffee motors

Question
In June I traded my 2002 Toyota Avalon XL and paid cash for  a 2009 Avalon XLS, in anticipation of a situation that did not develop. I find that I don't like the car nearly as well as I did my old one (it's too big, too hard to shift, I don't like leather seats, too many functions that I will never use etc.)

This is what I am thinking about doing: Sell or trade the XLS, with 5000 miles, (My zip is 73013 if that helps.) The KBB trade in value value is Approx $29K. I want a stripped down 2009 Avalon XL, cloth seats and  as few extras as possible. The KBB MSRP is approx $29K. I bought my last two AValons at 75% of the sticker price before trade in. that comes out to around $21,700, target price. (I realize that it will be more because KBB MSRB is always a little low and most cars have a couple of thousand dollars worth of "extras".)

Is this realistic? would I be better off trading the car at the Toyota dealer or selling it outright to a place like carmax or diffee motors which is a local company that has been in business for 50 years, "buying nice clean cars" as they say in their ads.
If I can talk the Toyota dealer into giving me a reasonable trade in, How do I trade down? Do they just hand over the car and a check for the difference? Seems unlikely!

Thanks, Jo

Answer
Hello Jo,

I did a little bit of research and from what I can gather, it appears your state has a sales tax credit for trade-ins. I was unable to determine if this was a full credit or partial credit, but you can easily find out by contacting a title company, dmv, etc.

Depending on your sales tax rate, this could make a remarkable difference. For example, in Louisiana, local and state sales tax totals 10% (in certain areas). If I purchase a car for $30,000, I'll have approximately $3000 in sales taxes to pay, which adds to the bottom line. If I trade in a car with $25,000 on the purchase, I'll only pay $500 in sales taxes (taxed on trade difference, not price). In your situation, you would have to get several thousand more dollars from an individual or third-party to justify doing a private sale (unless you can find a purchaser to agree to an "in and out" which may or may not be legal in your state...I'm not sure).

Your 2009 Avalon is not in the book yet. I realize it's listed in KBB, but that's really more of a consumer guide. Dealers and banks use NADA and Black Book, primarily. It's not listed in NADA (too new), but may be in Black Book (I can't access it anymore).

I wouldn't put too much hope in the figure you received from KBB. As a matter of fact, I would completely forget about that figure, because it's probably only going to disappoint you. 2010 Avalons are already availble, and even though your car is only a few months old, it's technically one model year old already.

As far as getting cash back...yes, if you have a clear title with no lien and "trade down", you will usually get a check immediately...if not immediately, within a day or two (at least that's the way every dealership I've worked with handled it). But, If your ultimate goal is to get cash back, it may not be possible. I've found a few 2009 Avalon Limited models for sale, for around 31-32K. The Limited is several thousand dollars more expensive than the XLS when new. These cars have about 9-10k miles on them. I promise you the dealer has at least $2000 markup on that list price for those models. This is why I don't believe your going to get 29k for your car.

A 2009 or 2010 Avalon has an invoice price in the mid-$25,000 range. Of course, if it has any extras, this will go up. Edmunds TMV (average price paid-which I have found to be pretty darn accurate over the years) lists the average price paid for an XL in the mid $25,000 range. You should be able to purchase this vehicle within a few hundred dollars of invoice, given the current economic situation (Toyota is doing better than others--but is still hurting).

There doesn't appear to be any rebates or incentives, but there could be some "dealer cash" on the 2009 models (Toyota doesn't do that often).

Here's what you need to do:

Take your vehicle to 3 to 4 dealers (non-Toyota). Tell them you want to sell your Avalon. At this point, you aren't buying anything, just getting an approximate value. This will give you a price range, probably within $1000 of what you can get for your Avalon.

If the figure is "close enough", go to your Toyota dealer and be prepared to deal. Find the car you want and just try to work the best deal you can. Ignore any "bump" or "addendum" stickers they may have next to the factory MSRP sticker. Unless it is for something you can actually see (spoiler, etc). Most of these stickers are bogus, but a few are legit.

You may also want to consider buying a used Avalon. As far as I can see, there were no 2008-2009 model year changes. There are some used 09 models available, some with very low mileage. As your about to find out, first year depreciation is steep. This is why it's such a good deal to buy a "barely used" car.

Jo, I hope this works out for you and you can accomplish your goal. My mother-in-law (grand) has been dreaming of an Avalon for years, and just bought her first one :) She loves it.

Let me know if you have any other questions...I'll be happy to answer them.