If you're financing, the rule of thumb is to make a down payment of around 20% on a used car. In most cases, that will cover the depreciation value of the first year. Should you want to trade, you most likely won't be in a negative situation

Whats My Trade Worth

Rule #1…focus on the trade difference…lets say you've been looking at a $15,000 car at one Dealership and your trade allowance was $3,000…but another dealer allowed $4,000 trade for the same car, same condition but the Dealer wanted $16,000…there is no difference…you would like the high trade in value from the one dealer…and the discounted price from the other…this can be very frustrating…A large dealership in most cases will maximize your trade in order to sell you a car...You must concentrate only on what you have to pay difference, not what Dealer tells you your trade is worth...

Trading your vehicle to purchase brand new its a very simple process shopping your trade one dealership VS another...
Trading up a few model years for another used vehicle becomes more complicated as there cant be 2 identical used vehicles, they may look the same with about same miles but will not have same history and most likely wont perform the same
Shopping at a one price store where the prices are firm you are more likely to get a true value for your trade
Shopping at a store where prices are negotiable you will get a higher trade value on paper as your trade allowance figure will show against the asking price...

You found the car you want to buy and your thinking ( example ) if I can get $ 7000. for my trade its a deal.

An experienced salesman fills out an appraisal form and ask's you how much were you thinking becauce the first question used car manager will ask salesperson , how much you need to make the deal. - Buyer wants $7000. - Buyer dont know the value - Buyer said you tell me, The right approch let dealer make the first move.

The used car Mgr will inspect your trade going through a series of steps you will find if you navigate to THE TEST DRIVE webpage, Mgr will make notes
EXAMPLE needs 2 tires $ 150. - noisy muffler $ 100. - damaged  fender $ 250. - total visual re-condition cost $ 500.

# 1...Your trading a Ford at a Ford dealership and the used car Mgr wants the trade for his inventory. His next step is checking dealer auction results for the past few weeks and Mgr will find same vehicle with about same miles and price it was sold for, Example he found same at $ 5000. now he deducts the $ 500. for re-condition and will be willing to pay $ 4500. for trade, but its testing time to see how sharp you are having done some homework and will most likely send salesman back with an offer $ 3500. to $ 4000. for you to accept.

# 2...Your trading the Ford lets say at a Toyota store, If the Mgr is a real pro with experience he will arrive at a trade value without shopping your trade, most Mgr's lack the experience to this level and will phone wholesalers and in this example Ford dealers to get bids and at same time disclose his findings about the Tires - Muffler - damaged Fender which allows bidder to arrive at a fair bid.

On average you will not if you are buying another vehicle

EXAMPLE... you wanted $ 2000. more than dealer allowed and figure you will get this amount selling private, if you trade on another vehicle you only pay taxes on the difference between cost of vehicle and trade in allowance, figure out this amount plus all the hassle selling private and you may find its not worth the effort as you will now be paying tax on the full amount buying another vehicle.

 A dealer will maximize any trade in order to sell a car, but will not pay more than what vehicle worth unless they cut their profit on vehicle being sold.
Example...your trade has got a true dealer value $ 6000. and you will not make the deal for less than $ 7000. allowed for your trade, The vehicle your buying shows a gross dealer profit $ 2000. the question now is will dealer take away from the $ 2000. profit and settle for a total gross profit $ 1000.
Many factors come into play, if vehicle your buying has been in inventory for some time or used car manager thinks unit will not bring more profit he is very likely to take a skinny deal and in many cases will show no profit at all, he simply wants car to go away, on the other hand if the unit your buying can most likely be sold anytime with a minium profit of $ 2000. you will not get the $ 1000. more in trade.

I came across an add in bold letters DRIVE- DRAG OR PULL YOUR TRADE $ 1000. GUARANTEED

I showed the add to two friends and asked, if you were in the market for a new car right now and had a trade worth less than $ 1000. would this add be of interest. one comment was, i would sure look into it, the other comment, wow how can dealer afford to do that.

I really was stunned with both answers, i had no idea the average consumer could be that gullible falling for a scam like that,  i have never questioned the intelligence of dealer adds only the intelligence of consumers reading them...

HERE IS HOW I READ THE ADD... if you arrive at dealership with an old clunker thats totally worthless you get $ 1000. in a trade on another car, its going to cost the dealer having it shipped to the wreckers...that tells me to arrive at dealership knowing any car will have $ 1000. discount before i even start to negotiate...now if i had a trade worth about $ 500. i then know $ 1500. discount is where i am at before negotiation for a further discount.