Quite often we see dealers offer something called a dealer trade. This is a situation where the dealer doesn’t have the car in stock but can get it on trade from another car dealer. I wanted to use this blog post to provide a little more insight into how dealer trades work and what a CarWoo! buyer should be aware of when accepting an offer on a dealer trade. This is not an article about Trade In’s (i.e you have a car you want to trade in for cash). That’s a topic for another blog post.
What is a Dealer Trade?
Car dealers have access to something colloquially known as a Dealer Locate system. This allows them to search the inventory of any other dealer with the same make of car. When you request a car the dealer will look at their own inventory first to see if they have the car on their lot. If they don’t have the car they’ll often use the Locate system to see if another dealer has that car in inventory. If they can find it they’ll often create an offer for you and then tell you they can get that car on a trade from another dealership.
Caveat of a Dealer Trade
There are several issues with dealer trades that you should be aware of:
- Trade Doesn’t Imply Control: Just because a dealer can get it on a trade doesn’t mean anything about the control of the car. That car can get sold out and the dealer who you’re working with has no control over it because it’s not part of their inventory
- Dealer Trade = Additional Fees: If a dealer does a car on a trade there may be fees involved. Typically these fees will run around $300 per car. Some dealers waive this fee but some don’t.
Deals where the car is offered on a dealer trade tend to fall through mainly because the dealer you’re working with has no control of that car. It can be sold at any time and unfortunately your dealer might not be notified so you could end up with a nasty surprise. Our best advice around handling dealer trades are:
- Decide Quickly: If your interested in this car and if it can only be found in a limited number of dealerships it’s fair to assume that’s either hard to find or high in demand. So don’t sit on your hands deciding on it because if you wait 4 or 5 days the car may be gone
- Put a Deposit Down to Secure It: Once you’ve decided on it. Accept the offer, call the dealer and put a deposit down. That way the dealer can secure that car from the other dealership so no one else can purchase it from you. Remember that all deposits have to be refundable. So if the deal falls through for whatever reason you can always get your money back