General car question

[XYZ]

Sorry this isn't a specific Z question but I think it's a good genereal one to ask.

I'm wondering if there is a rule of thumb for what the auction purchase price of a vehicle might be relative to a trade-in value for a car at a dealer. For clarification - if I take a car into a dealer and get $20,000 in trade value what would that same vehicle go for at an auction, roughly. Is it the same, a few thousand less...? I'm looking at buying a used car that was puchased by a dealer through auction and I'm trying to figure what the dealer has into that vehicle.

Another question - What is a reasonable profit for a dealer? Is it 2%-3% over their cost or 5%, 10%? I really hate buying newer cars but its a reality we all face. Any help would really be appreciated.

Thanks!

[2ManyZs]

Best thing to do is to get yourself one of the NADA books (or similar) while shopping. That way you can look up the car you are looking at and get a ball park estimate of what the dealer has into it. They will try to get you to pay retail price, while they have invested only wholesale price(or less). The trade in value is usually somewhere in between.

Most dealers are going to try for a 10% mark-up, but a lot depends on the dealer itself and how many units they really have crossing their lots. Low volume dealers are going to try for the highest mark-up while a higher volume dealer may discount their mark-up to sell larger amounts of vehicles.

Best thing to do is find the make and model you are interested in, look up its value, then go make an offer of what you are willing to pay, if they don't like it, leave. Come back the next day and offer it again, if they don't budge, then the haggling begins.

One thing to think about, if you have come close to terms, asking for an extended warranty can make a big difference. Some "program" cars (usually lease vehicles off lease or company cars) still have the remainder of the factory warranty attached, however, getting an extended warranty can make up the difference in what you are willing to pay versus what they are asking.

[Daniel]

As always 2mz's has good info.The Nada book comes in two forms.If you go to a bookstore you will buy the "consumer version"The one that the dealer use the blue book as it is called is only available to those in the business.The easiest way around that is go to your bank and ask to see theirs.It is the current and correct version.It shows the loan value,wholesale value ,trade in value and more.It has adders and detractors for things like options in the car as well as deducts for mileage,lack of options etc.Believe me that guy that bought that car at auction was using that same book as a reference.I am sure they will help you as they smell --loan!!I've never had a problem using theirs,but if they are not willing to share,I would find a new bank.Credit unions have these also. Have fun!! Daniel