Finding a best deal formula for trade and buying

[pk1023]

Hey all, so if you've followed any of my posts, you know I am thinking of buying a bigger rig.

I am talking to everybody in my state and dealing with the normal issues around trade value, sales price, etc etc.

I know that the "best deal" equation lies in the difference between sales price and trade in value.

It seems like there should be a formula that could boil the sales stats down to something in percentage.

Let's say I could get a dealer to give me sales stats on a certain unit they sell alot of. Meaning they'd give me a spreadsheet with sales price for each unit, final sales. Then they'd also give me the trade in price they paid. If I then used the publish NADA value to assign a trade value percentage to it.

At that point, couldn't I figure out how good each customer's deal was? I wouldn't even calc in Title/Doc/Extra fees because they are set.

Or am I insane and there's no math that will produce that number? None the less no dealer will give me those stats?

[DSDP_Don]

So far "darsben" has probably given the nest advice.

We recently traded in and bought new. I owned my DP for 9 years and followed the value of other similar rigs. Mine was immaculate and had every upgrade. I knew it was probably worth 95K in a private party sale and 85K in a dealer trade. I also knew that as a short DP (36' Monaco), it would sell fast.

I took 27% off the dealer's new coach price, added tax and license and deducted the value of my trade. I had a number written on a Nada printout that I thought should be a reasonable/good deal. Unbelievably, we hit the exact number. I flipped my page over and showed the dealer....we were done and signed papers.

I knew the dealer did well on my coach, but I also knew that he gave me a good price on the new one, so I was satisfied. I have a good relationship with the dealer and he immediately takes care of whatever I need. We've become good friends. He even had me do the walk thru/PDI on my coach with the new owners. Paying me with a nice gift card for dinner. Coach sold in two weeks.

[wintersun]

Dealers have fixed overhead costs for their location, their office staff, salespeople, and maintenance, as well as the financing costs for their inventory and advertising and other sales and marketing expenses. They need to cover all these costs in addition to what they pay the manufacturer for the RV or they will go out of business.

Want to save money, then buy a used RV where the seller has none of this overhead and has already paid for the depreciation expenses year by year. You have to invest more time than if you simply walk onto a dealer's lot and find a salesperson but you can save tens of thousands of dollars.

Trading in a vehicle is always the easiest and most costly approach. Sell it yourself and with Craigslist the advertising is free. You are likely to get an extra couple of thousand dollars or more and easily compensation for your time.

Not being one of the 0.1 percent of Americans that have had their wealth double over the past 15 years I am not inclined to spend more than is absolutely necessary. Maybe that is why we have zero debt of any kind.

[Uplander]

A few random thoughts......I can only assume RV Dealers are cut from the same cloth as Automobile Dealers.
Based on some real life employment experiences here are some facts:
First start by indicating you are going to trade in your unit (car, RV etc.). In doing this the dealer will adjust the price as a "package". If the dealership is offering their in house financing indicate you will use their services.(they make $$$ on the financing you never hear about). All this goes into your new purchase price.....ergo....if you go in saying this is a cash deal..No trade..No financing, you will pay more. The sales price will be lower on the "deal" with trade and financing. Then just change your mind and tell them you'll pay cash based on the lower price....Don't have the cash....no problem...borrow it from a credit union at a lower rate. Reduce the amount of cash out of pocket by selling your unit privately. You will always get more real dollars if you sell it privately. Sell your old unit then go shopping for your new unit. Try to find a private sale on a as-new unit rather than at a RV dealership.

Always remember if the RV Salesman/Automobile Salesman's lips are moving chances are good he is not speaking the truth!!

Yes this process involves some effort on your part but it will save you dollars.

Some of the facts in this post might explain the creative math in the previous post by the dealer selling a unit for less than he paid for it....or did he???? What he did was inflate the price of the new unit being sold to appear to give a generous trade in on a very clean unit he knew he could turn over quickly. He also may have reaped a big profit on financing. Tough business to understand even if you worked in the industry.

[4x4ord]

Years ago I tried buying a very nice used 5th wheel off a fellow who knew he had a well kept trailer. He was asking $17000. I offered him $14,000 but there was no way he was going to come down that much as the dealer was going to give him 16000 trade in value. So we parted company and he traded his trailer in. I bought it from the dealer for $13000 which was only $500 under their asking price of $13,500. You never know how much a dealer will move or what they are up to.

[tatest]

Being close to the used car business for many years, knowing salesmen and sales managers socially, I can tell you that "hunger" also comes into the deal. These guys work on commission, and the longer it has been since they've had a decent paycheck, the more willing they might be to trade off some of their little share of the pie to keep you from walking out the door. But if they've had a couple of good weeks, they might be more likely to hold out for more margin and a bigger commission, because the next guy to come in the door might be looking for exactly what they have, and pay the asking price to get it.

So thebest you can do is to know what you want, and what you want to pay for it. If you can't get it for that price, be ready to walk. If you do get it for that price, don't be worrying for the rest of your life that you might have been able to pay a little less.

[Gannet]

There is no "formula". The dealer doesn't have one either. What darsben posted is correct.

For buyers, there is no substitute for knowing the market.

[Old-Biscuit]

I check on-line ads private and dealer to see what a particular unit is listed for.

Then I just tell dealer what I am willing to pay.....deal/no deal OK.

[darsben]

NYCgrrl wrote:

pk1023 wrote:

darsben wrote:
Time value of money comes into play making the trade worth less to the dealer at this time.

How will you figure that into the equation?

That's the thing, you can't estimate that. I just finished Strategic Accounting for my MBA and I saw many formulas that tried to assign present value versus future returns.

I don't think it can be done here.

I think it can but it'll require doing some forensic acctng basics first. Certainly an average will be necessary since some will not provide accurate information.

And I already have a headache from thinking about it so I WILL PASS.

[NYCgrrl]

pk1023 wrote:

darsben wrote:
Time value of money comes into play making the trade worth less to the dealer at this time.

How will you figure that into the equation?

That's the thing, you can't estimate that. I just finished Strategic Accounting for my MBA and I saw many formulas that tried to assign present value versus future returns.

I don't think it can be done here.

I think it can but it'll require doing some forensic acctng basics first. Certainly an average will be necessary since some will not provide accurate information.

[kcmoedoe]

To start with, NADA is an approximation of value. In automobiles it is based on reported sales and in RV land it is a percentage of the original MSRP. If you had two 2006 Honda Accords with 50,000 miles and one was $12,000 and one was $8,000, which one is the better deal? You cannot know, since there is much more to the valuation than what can be expressed by age, make and mileage. Condition, options, location, color and a host of other issues all come into play.

[pk1023]

darsben wrote:
Time value of money comes into play making the trade worth less to the dealer at this time.

How will you figure that into the equation?

That's the thing, you can't estimate that. I just finished Strategic Accounting for my MBA and I saw many formulas that tried to assign present value versus future returns.

I don't think it can be done here.

[Sandia_Man]

No such chance and if you are trying to upgrade and hope not to take it in the shorts, good luck. Whether you paid cash or financed your current rig, trading it in will always be a losing proposition although the dealer can make you think you got a good deal, at least that's what he is shooting for. Choose your next RV carefully to reduce the chance of repeating this scenario. Enjoy your new TT!!!

[darsben]

There is no formula, the price you pay is situational to the dealer on any particular day.
The dealer is trying to feed his family and he will want to profit on both the new sale and the sale of your old rig.
Use the K*I*S*S* method.
Sell yours and buy the rig you are looking at on a clean deal


Higher priced rigs of a certain type have a larger % of markup so the dealer can dicker more. The conventional thinking around here is that on a Motor home you should get about 30% off on a clean trade.
If you are looking for a higher number on your trade than is reasonable then the difference between what it is worth to the dealer versus your expectations for trade on your rig has to come out of the 30%.
The easiest way to avoid problems is to not trade but sell it yourself. The value of your rig to the dealer depends on how fast he thinks he can move your old rig and for what price. An example would be trading in a POP UP in November in the Northern U.S. The dealer will figure he has to hold it all winter or wholesale off to another dealer. Time value of money comes into play making the trade worth less to the dealer at this time.

How will you figure that into the equation?

[kvangil]

In all my years buying cars and campers (and I've bought quite a few cars especially), I've only had 1 dealer who presented me with a "sales" history that included recent final selling price, and trade-ins. Even so, I thought the numbers were fudged and told that dealer I didn't care to look at his data because I did my own research...