Author Topic: Trade in valuations  (Read 6076 times)

RichardA

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Re: Trade in valuations
« Reply #15 on: August 30, 2015, 07:25:52 PM »
Dealers often use WBAC to value trade-ins. WBAC is owned by British Car Auctions so it could be fairly accurate valuation of what the car will fetch at auction.
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Rory

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Re: Trade in valuations
« Reply #16 on: August 30, 2015, 08:44:16 PM »
you lose 20% of purchase price you just paid in VAT straight away when car leaves the showroom.

No you don't - the price to retail customers is VAT inclusive and the VAT element depreciates over the life of the car in the same way as the car's ex-VAT value.

Hence when used are sold by dealers they have to pay VAT on the profit they make (VAT margin scheme).

Now, of course it could be that a nearly-new car will be 20% cheaper than a new one, but that's just market forces.  If the car was in demand then it could even be dearer than new.

http://www.thecarexpert.co.uk/depreciation/ 

http://conversation.which.co.uk/transport-travel/buy-new-used-car/

http://www.thisismoney.co.uk/money/experts/article-1630721/Do-I-have-to-pay-VAT-on-a-second-hand-car.html

I'm confused by your links - they confirm that used cars do include an element of VAT.   Except for the second link, whch doesn't mention VAT at all - except for the reply to the first comment which says "Donít be silly. Of course you pay the vat, or at least a proportion of it. If you buy a used car for half its new price, youíre paying half the vat!"

Ozzie

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Re: Trade in valuations
« Reply #17 on: August 30, 2015, 09:07:47 PM »
As previously mentioned its the cost to change the car thats important, not necessarily the trade-in value.

I used to buy a new Vauxhall every 2 years, as Vauxhall used to offer heavy discounts of around 20% to driving schools. So as an example, a £12,000 Corsa would be discounted to £9500, then by using Vauxhalls approved GM Credit card it was easy to have £1000 of reward points, and a £750 loyalty discount (previously owned a Vauxhall), and a further £750 dealer discount so that £12,000 Corsa is now £7000. I would then get £4500 trade-in for my two-year old 80,000 Corsa, so the cost to change is now £2500.

Hence why many driving schools used Corsas.
100k miles - April 2014, 150k miles - April 2015.
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Yern

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Re: Trade in valuations
« Reply #18 on: August 30, 2015, 09:34:14 PM »
Swopping cars too often is a sure way to waste money, and depreciation is not linear, cars depreciate most in first couple of years (you lose 20% of purchase price you just paid in VAT straight away when car leaves the showroom).

That's why the last couple of Jazz's...and the Nissan have been 'pre-registered' cars. In 2 years when I change again be considering pre-reg New Jazz.

Rory

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Re: Trade in valuations
« Reply #19 on: August 30, 2015, 10:31:15 PM »
I buy  3-12 month used cars at huge discounts - my Jazz was 6 months old, had a 5 year service plan and was £3 less than list - with 300 miles on the clock.

Buying new cars is for others.. We keep our cars for a decade or longer. Our Peugeot 106- 17 years , our Yaris 10years and counting...  Depreciation ? Very low. Running costs? Very low.

I was not educated in Aberdeen for nothing - Yorkshire people are spendthrifts:-)


I presume you mean £3K for the Jazz - not bad, although the mileage is oddly low.   My Merc was 5mths old with 6K miles and listed at £36K - I paid £23.5K.

On the other hand, just bought a new VW Tiguan - got £5K off but that brings it down to the same price as 6-12mth old cars on dealer forecourts.  And it's not like the used ones are priced high but can be discounted - I tried and discounts offered were negligible. 

zzaj

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Re: Trade in valuations
« Reply #20 on: August 30, 2015, 11:01:28 PM »
Dealers often use WBAC to value trade-ins. WBAC is owned by British Car Auctions so it could be fairly accurate valuation of what the car will fetch at auction.

Your point is true to a degree.

However, the valuation from WBAC needs to be lower than the auction price. They have costs in their operation even if they are just aggregating volume for BCA without profit. If WBAC are covering their costs/ making a profit, a dealer valuing at the WBAC price will also make WBAC costs/ profit on the auction sale of the part exchange as well as the sale of the new car. The dealers marginal costs will be much less than WBAC full costs so it is very attractive to the dealer to quote a WBAC valuation. (That's why they are called dealers!)

So as a rule of thumb, a WBAC valuation is likely to be lower than the market rate. How much lower I don't know, but I suspect a fair amount?

Like all things it is best to do your research and get at least three quotes each for buying the car and selling the car. The least "cost of change" option will likely be a private sale and purchase through a car broker. Some don't like selling privately (me too!), some don't like buying though a broker - so you pays your money and takes your choice. I found when I was in the market for my Jazz, I had some very, very, silly (naÔve) "cost of change offers" from Honda dealers.

It is interesting to take the car to a local car dealer who buys cars for cash to see what they offer.

That's what I did - and used a broker, who found a Honda dealer quoting about £3,500 off an unregistered brand new Jazz EX CVT with all the normal Honda benefits included just as a normal customer. (I bought the car directly from the dealer and paid the dealer in exactly the normal way except the price and with no haggling).

culzean

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Re: Trade in valuations
« Reply #21 on: August 31, 2015, 09:13:51 AM »
I'm confused by your links - they confirm that used cars do include an element of VAT.   Except for the second link, whch doesn't mention VAT at all - except for the reply to the first comment which says "Donít be silly. Of course you pay the vat, or at least a proportion of it. If you buy a used car for half its new price, youíre paying half the vat!"

I'm not disagreeing with you about an element of VAT being factored into used car prices, after all if the dealer has to pay VAT he is going to pass it on to customer.  There are two schemes,  one where the dealer pays VAT only on his profit on the used car and one where VAT is payable on the whole cost of used car (I guess HMRC love the second one, although it seems to me to be double-dipping and they are getting more VAT than they should, but dealer paperwork is probably easier),   the second one is going to cost the customer more.   Sometimes pre-registered cars can be a bargain (dealers register them to push up their 'new car'  sales for that month),  but because these cannot be classed as new cars they are sometimes not eligible for finance and dealers are forced to sell a 'new' car at a discount.

I hope the links give a mixed view of used car transactions - which is exactly the way it is in the real world - let the buyer beware but also know that in the oversupplied and competitive UK market there is always room to haggle,  and never appear to the salesman that you have fallen in love with the car and will buy it whatever,  they can spot this a mile away and will not budge on price, always make sure they know you are looking at other dealers.

There seems to be a developing trend for younger people to lease cars nowadays,  which is fine if you want a new car regularly and don't cover many miles ( the smaller the agreed annual mileage the cheaper the lease payment but you will get charged  per extra mile if you go over the agreed lease mileage) - and you will never own the car - and if you want to buy out the lease at the end you will be up for a hefty sum of money.   Where the lease scheme is run by a car maker they obviously want to trap people financially into rolling the lease over into another of their products - which is good business for them. 
« Last Edit: August 31, 2015, 09:31:50 AM by culzean »
Some people will only consider you an expert if they agree with your point of view or advice,  when you give them advice they don't like they consider you an idiot

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