How Do Dealer Trades Work?
Buyers might hear two different terms while car shopping: trade-in and dealer trade. Don’t confuse these two types of trades; they are not the same. A trade-in is when the buyer uses their current car to offset the price of the car that they plan to purchase at the dealership. However, a trade-in also could add more to the price of the new purchase if that older car’s loan hasn’t been paid in full.
A dealer trade is very different from a trade-in. Here’s what buyers need to know about dealer trades to help them decide whether or not they should agree to this type of trade.
What is a Dealer Trade?
Suppose a buyer is shopping for a new car at a dealership but they can’t find exactly what they want on the lot. The dealership tells the buyer that this car might be at another dealership, but they can help find it.
A dealership could have zero inventory for a specific model, which means they might look for options at another dealership. This might spark a dealer trade. A dealer trade can be defined as dealerships swapping vehicles. Dealership A goes to dealership B to find the exact car for their buyer.
Dealer trades can help ensure that the buyer gets exactly what they want. There are caveats to this type of transaction; dealer trades don’t always end with the dealer securing the perfect car. Sometimes it just might not happen. Some dealerships might not be willing to offer up a vehicle for a trade…especially if that type of vehicle is selling well and popular.
Why Pursue a Dealer Trade?
There are advantages to a dealer trade, too. The trade still allows the buyer to just deal with one salesperson. The dealership (or salesperson) is hunting for the right car; this means that the buyer doesn’t have to travel to multiple dealerships and many salespeople to find what they want.
Plus, dealer trades could work to the buyer’s advantage. This type of trade could allow the buyer to find the exact car that they desire. There’s also still room for negotiation.
A dealer trade could be a great option for buyers who have their heart set on a certain model. Buyers could work with a salesperson to find that ideal car. If you’re willing to travel, you may find your dream car across state borders.
However, there could be a flip side to dealer trades right now, too. Depending on the inventory at each dealership, there might not be a willingness to engage in the trade. If a car is really popular, then the dealership might want to hold onto it. Certain hard-to-find models might be a goldmine now, which would make the dealer trade for them a difficult process.
Other Options Instead of a Dealer Trade
Dealer trades aren’t the only option for finding the perfect car. Some buyers prefer to do most of their car shopping research online, and they also might prefer to do as much of the legwork for the deal online, too. Cox Automotive’s Car Buyer Journey Study: Pandemic Edition found that buyers spent 13 hours and 13 minutes on the purchase process (in 2020)…and seven hours and 14 minutes conducting online research and online shopping. Meanwhile, 35 percent went into the process knowing precisely what they wanted.
While more than half of those buyers might not know what car they want when they begin their search, those who do have their perfect car in mind might begin their hunt to locate that vehicle. So how can buyers find their ideal car with all the features without having the sales team hunt for them (if it’s not at a particular dealership)? This is where the power of the internet is incredibly helpful for buyers!
Carzing provides a query system that enables buyers to hunt for their perfect car. Buyers can search for new and used cars by make/model, body type or price. In addition, shoppers also can enter their own specific keywords to help narrow the search.
The search will show all the available options and which dealership offers the vehicle in their inventory. Online tools like those offered by Carzing allow the buyer to control their search. This can mean less time spent visiting dealerships and a more relaxed and simple shopping experience.
Carzing also enables buyers to get pre-qualified for financing, too. When they find the car they want, they can find financing that fits their financial circumstances. Buyers can discover the loan terms that are right for them and a monthly payment that doesn’t crunch their budget. Carzing also helps buyers understand how much they need to have for a down payment when buying their car.
What if Buyers Can’t Find Their Car?
While Carzing helps buyers easily search for specific cars and a dealer trade also could help buyers find that vehicle, what happens if the car is nowhere to be found? Is that possible?
The used and new car market is subject to fluctuation because of supply and demand. If supply is low, and demand is high, then inventory can be an issue. Cars might be driving off the lots quickly as eager buyers jump to buy the car they want.
If the demand for cars increases and supply doesn’t increase with that demand, then the prices will go up. Heavy demand for a specific model also might mean that buyers might need to search longer for that perfect car or maybe make concessions.
Supply and demand also could be relative to area. Some dealerships could be crunched for supply if their demand is higher than other areas. In this case, buyers might simply need to begin their search and find out the state of the inventory in their area.
If demand is high and prices are higher, should buyers get picky? Should they work with dealerships or search online to find the car that meets their exact specifications? And is a dealer trade feasible in a hot car market?
Buyers might use online tools to find their car before heading to the dealership. They might find what they want via their online search. However, if they have exact specifications that aren’t pulled up via online inventory, they could opt to go to the dealership to pursue a dealer trade. In a demand-driven market, though, there isn’t always a guarantee that the perfect car will be available. For the buyer whose heart is set on that perfect model, it might be worth the search.