Can't tell you if it is a good deal, because you only know part of what the deal is. If they give you a good deal on the trade-in, but not a good deal on the price of the new car, then it isn't necessarily a good deal overall.

For example:
Dealership 'A' will sell you a car for $20,000 but only give you $5,000 on your trade-in.
Dealership 'B' will sell you a car for $22,000 but give you $6,000 for your trade-in.

Then 'A' is still a better deal even though 'B' will give you more for your trade-in.

A while ago someone here said that they could have paid cash for a car but chose to go for the 0% financing deal.

I said that I'd bet that had she sent her brother in the next day to purchase exactly the same car, for cash ...

... that the price which they quoted when they got down to the nitty gritty, would have been different - and lower - than she'd agreed to purchase for.

I suspect that one needs to check this offer (as all offers, actually) with a fine-toothed comb.

Advertisers have all kinds of tricks up their sleeves.

ole joyful

P.S. I could be wrong - I have been, lots of times.

o j

Thanks Greg, yes I am aware of making sure both pieces are a good deal

Ole Joyful, may not be true. Lately believe it or not you get a better deal with dealer financing, maybe not at 0 but at 2-4%. The reason is because the financing arm is different than the manufactureing arm even if they are both owned by Toyota or GM or Honda. The dealer will actually get an additional payment from the financing arm to get you to sign up for a loan.I know it is hard to believe. Years ago you definitely got a worse deal if you could not pay cash, not true anymore. The important thing to keep in mind is not to look at payments but the overall cost of the car and then the term and interest rate.

The car before this one, a Ford was actually cheaper to lease than to buy outright at 0% (at the time I could not pay cash). It cost 30k minus 2k if you paid cash. If you financed at 0% it was 30k, however 3 years interest at 5% on 30k was 1500 just for the first year so if you had a better use for the money it was worth financing. However, if you leased your interest rate on the part of the car you used was less than 3% (2001 low interest) and since Ford sold the car to its leasing division you get the 2k buyers incentive built into the lease price. The payments ended up being a total of 14,5k and the residual if you wanted to buy it was also 14, so it would cost you about 29k total as opposed to 30k if you financed at 0 and you had the use of your money for 3 years! So I ended up leasing, the car fell into a ditch and was never the same so I was able to return it which I could not have done had I bought it

saphire, keep in mind that the "20% over book" they're going to offer you will be nickeled-and-dimed for everything they can find -- the body damage, any above-average mileage, any maintenance which will be coming due soon, any mechanical problems they "discover", and so on. I would research a fair trade price and then work with them on it. Clean up the van (wash the outside, vacuum the inside, clean out the cubbies), do not accept the first figure they toss at you, and treat the trade-in like you would the purchase of the replacement vehicle (which also needs to be researched lest they take the 20% out on the price of the "hard to find" "have to order it" model you want.

Stop and think, why would a dealer pay someone 20% over book price when they can go to numerous nationwide auctions and buy thousands of them for 20% under book price? They want to get you in the door so they can work on you.
I was part of a credit union at one time and the national association did a survey and found:
0% and very low % financing was normally on selected models only (ones they were having a hard time getting rid of), would only be offered to buyers with near perfect credit and if you took the low interest rate then you paid full list price for the car.
The survey found that only something like 6% of the people who went for this deal, qualified. You are often better off to find the financing ahead of time, possibly at a credit union and then go to the dealer and haggle down the cash price. You will almost always come out ahead.

My dad (the king of car buyers BTW) always told me 3 things about buying a car.
1. Treat the trade-in transaction completely separate from the sales transaction. Don't even mention that you want to trade in your car. Don't even tell them you have a car!
2. Treat financing seperately too. Arrange your own financing before walking in the door.
3. It's only metal, glass, and plastic, don't fall in love. Be ready to walk away.

I followed his advice recently when we traded in our 2003 Honda. I liked the van, but it was too big, always thirsty, and made me feel 10 yrs older! I did some research (edmunds and kbb) to see what my trade was worth so I knew we weren't upside down on the short term loan. I then started looking for a car. Once I figured out the model, I researched a fair price and started looking at dealerships. I dealt online mainly at first. Whenever they asked, I said I would likely keep my car and I didn't need financing.
When it came time to buy, I knew the price I was willing to pay for the new car (actually it's 2 yo. Why pay for depreciation? That's the 4th thing he taught me), the fair trade-in amount, and I had already been approved for financing.
In the end, the dealer beat my best price, matched my trade-in value, and offered a better interest rate.

"A while ago someone here said that they could have paid cash for a car but chose to go for the 0% financing deal.

I said that I'd bet that had she sent her brother in the next day to purchase exactly the same car, for cash ...

... that the price which they quoted when they got down to the nitty gritty, would have been different - and lower -
than she'd agreed to purchase for. "

That was me and my 2003 Mercury Mountaineer.

The deal was worked up with cash first.

By the time we went in to the dealership later in the week, I saw an ad on TV for 0% financing and asked the dealer about it.

I was given 0% at the same cash price.... and that included all incentives.

Also be aware of what 'book' they're using. When my car was totaled a few years ago, the price I thought I'd get based on Kelly BB and Edmunds was a good $1000 more than what we actually got, because the insurance company used some 'book value' company that I'd never heard of.

Thanks for the advice.

Cool, I have wondered why they bother but I guess it is just advertising

Ang I agree with your father. I have seen those ads and you see in small prints that a FICO of over 750 is often needed. One time a credit union worked better, another time it was the dealership. I do think things have changed with financing as I posted above, now they do get a cut so they want you to finance with them but I agree that except in advertised offers, they will try to steer you higher if they can and pocket the difference unless you show them a better offer. However that is on the interest rate, not the price of the car. My needs are very specific such that at any point I can only buy one or two cars that are out there so if there is an incentive great, otherwise the last time my lease was up and I needed that car and nothing else was as good an option.

Luann, I totally believe you got a good deal

I have never traded in before. On my last car I could not buy 2 year old because the model with 8 seats was not available until 2004 when I bought my car (I have 5 children actually back then it was 3 plus 2 on the way!). The model I am considering also was not available as currently equiped before this year.

When I buy a car I go to the various web sites, including any enthusiast web sites such as Sienna Club. Org. They usually have an area where people brag about their best deal and I will usually try to match it. I will pay one visit to a dealership I do not plan to buy at usually the full service high pressure one so I can test drive and see the car and find out which options are definitely available (sometimes they are listed but are not regionally available, avoids the cannot get it nonsense that salesment pull). Then I will go to the various dealer websites within 50 miles. If they give you access to inventory I will check out their inventory. At this point based on the MSRP listed I can tell which cars have the packages I want in their inventory. The reality is if they have 4 blue minivans with leather and only one with cloth you can probably get a better deal percentage wise on the one with leather (assuming you want that). I will then contact whatever dealerships have a decent amount of inventory or are known for discounting. Then I will pay a visit to various dealerships in the area to see what I can get in person from the ones with lots of inventory of the specific car, package and color I want or that I know from experience really will discount. If it all possible I will deal with the guy in the booth rather than the salesperson. I always take the wholesale cost breakdown with me, knowing it is not the true invoice because there is usually a holdback of 2% of the base price

Also I have noticed that Edmunds TMV price should be ignored. It is usually higher than what I have paid

One thing about the inventory, sometimes things are listed but are not for sale, owners wife is driving it and it will be a demo in a month. So just because the gray is listed, it might not be there when you get there

Treat the trade-in transaction completely separate from the sales transaction. Don't even mention that you want to trade in your car.

I've heard that tactic for years and I have to say that I just don't agree with it. Not that it's wrong to handle the transaction that way. Just that I've been successful handling both transactions together. Before I walk into the dealership, I'm armed with the price I'm willing to pay for the new(er) car and the price I want for my trade-in. Subtract the trade-in amount from the new-car price and get what I will call the "difference". Work on getting the difference -- or less.

I've dealt with too many car places which would not discount the price of the new car at all but would stack that discount on the trade-in. And vice-versa. With the technique quoted, you can end up stuck. But with the "difference" technique, if I know the car I want should cost $20,000 and my trade-in is worth $8,000, the difference is $12,000 and that's what I should aim for. If they want to sell the new car for $23,000 and give me $11,000 for my car, I don't care -- it comes out in the wash. Ditto if I get them down to $18,500 for the new car even though they're offering only $6,500 for my current car. Same difference. That way they can play their little game but I keep the rules.

One other consideration re: trade-ins. In some states, the value of the trade-in is taken off the sale price of the new car before sales tax is computed. This can mean a savings of several hundred dollars. It's worth considering this when an offer is made for your trade-in -- if selling it yourself, you'll have to cover both the cost (and time) of selling it as well as the extra sales tax. Sometimes it just doesn't pay to DIY.