On my last trip to a used car lot, I was able to get exactly what I wanted out of the transaction. The salesman, of course, tried to talk me into getting more car than I needed, and more importantly, more car than I could afford. I wanted to trade my car outright and not pay anything more than taxes, title and the like out of pocket. This is of course not what the dealers wanted me to do. They wanted to convince me that for a mere $50-$100 per month, I could afford a nice upgrade.
The reason for the trip was that my family had simply outgrown our current vehicle. At first we figured that is was going to cost us a premium to get a larger capacity vehicle because we had to make the purchase. I decided to be up front and honest about this need. So I had already told the salesman on the phone that I was coming to look for a 7 passenger van or SUV and I had seen that he had two such vehicles in my price range on the Internet. It helped that this particular dealer understands that with the Internet at my disposal, I have dozens of local dealers with even more potential vehicles to choose from.
He showed me both of the vehicles, and affixed a license plate to them to allow me to take each for a test drive. I drove both of them onto the highway, which allowed me to test them at high speeds, braking, lane shifting, etc. I parked the vehicles right next to my current car which set up a rather humorous conversation with the salesman. I discussed the pros and cons of both the van and SUV that I had tested, and then looked at my vehicle as if I had just noticed it there and said “whoa, this is nice.”
The salesman had a terrified look on his face because he had no idea where my car came from as I showed up while he was eating lunch. I only allowed him to panic for a few seconds before I admitted that it was my car. I showed him the minor ding on the driver’s side fender and explained that a bicycle had fallen from a rack in my garage. He said that it could easily be repaired. Then I showed him the passenger side fender which was in far worse condition. I advised that a Jeep Commander had fallen off of a rack and hit that side. He said that it looked like it would most likely need to be replaced and repainted to match. Then I discussed how my vehicle, Chrysler Pacifica, only had six seats and that I needed to have seven seats in order to take my newest family member with us to church the next morning.
He said that he thought he could work out a deal on the van that I liked, and could recommend a body shop to fix the fender. I told them that actually it would work best if he fixed the fender and I took the van. He told me that dealers really do not like to swap inventory but he could see what could be arranged. His attitude changed when he found out that I owned my car outright. It appears that once he knew that there was no loan to deal with and one less stack of paperwork to fill out, he was more than happy to arrange a fair trade.
I know that the blue book value of my Pacifica was a little higher than the value of the van, but I also know that the van has 10,000 less miles, and does not need to have a fender repaired. Due to my being frugal and paying off the Pacifica early, I was able to make an even trade for the higher seating capacity vehicle that I needed without any additional cost.
As a note, I purchased the 2004 Pacifica in August of 2007. It was a company leased vehicle with relatively low miles that I was able to get for half of its original price. By being frugal I was able to pay off the loan early, not only saving money on interest charges, but also allowing me to swap the vehicle with no additional cost when I needed to trade it in. There is no easier way to avoid being upside down on an auto loan than to not have an auto loan at all!