As Jalopnik’s resident car-buying expert and a professional car shopper, I get emails. Lots of emails. I’ve picked a few of your questions and will try to help out. This week we are discussing cashing out equity in your used car and what to do if you find out the pre-owned car you are about to buy is “overpriced.”
With the used car market still going bonkers is now the time to sell at a premium even if you don’t have a replacement ready?
“ I’m currently a Rivian reservation holder and expecting delivery sometime next year (Jan or Feb). Out of curiosity I checked what my current financed Suburban is worth right now on multiple sites (Carvana, Vroom, AutoNation). I was shocked that not only do I finally have positive equity in it, it was worth way more than I thought. Just for fun we also checked our currently leased vehicle (a 2019 Accord) and got offers that were between $2500 and $2800 over our current lease buyout. We immediately took advantage of that and had a local dealer match that offer and bought a new Bolt yesterday (with $16,500 in incentives.. but that’s another story).
Anyway, is it normal to have offers this high or can we attribute this to the used car shortage? Do you think that will continue through the year or should I sell my Suburban now to take advantage of the high offers and just take over a cheap short term lease until the Rivian comes?”
The equity in your Suburban is very likely directly related to the used car shortage right now. Dealers are paying a premium for large domestic SUVS especially since new inventory is incredibly difficult to come by. As to whether or not you should cash out now or wait, it comes down to two factors – 1. How confident are you that Rivian will deliver the product in Quarter 1? These types of launches often get delayed. 2. What will you drive in the meantime? If you can get by without the Suburban while you wait, that gives you some money in your pocket, if you are going to take that equity and sink it into another purchase or lease just to hold you over, whatever money you “made” on the Chevy just got spent. Furthermore, your Suburban will still likely be worth something by the time the Rivian shows up, it just may not be worth as much as it is now.
Next, what should you do if you find out that the used car you are about to buy is “overpriced.”
“I was hoping I could get some advice from you regarding a car I recently made a down payment on. I have the original buyers order on hand. The salesperson is selling me the car for $18k when carfax has it valued at $14k. Is there any way I can get the value down? The salesperson has not signed the Buyers order yet and we haven’t done any other paperwork aside from that and the receipt for the down payment. But he did give me a buyers tag reciept-buyers copy.”
If parties have signed the contract there isn’t likely much you can do at this point. However, if the contract has not been solidified, you can certainly make whatever offer you want to the dealer in the hopes that they will come down in order to not lose the sale. That being said it’s probably unlikely they are going to give you a $4,000 reduction on that car. Therefore, the question becomes, can you find other cars with similar miles and equipment closer to that $14,000 mark? If so, and you have the ability to walk from this deal, perhaps you should just pursue those other cars.
Got a car buying conundrum that you need some assistance with? Email me at firstname.lastname@example.org!