Trade-In Values Falling for SUVs

If you're considering trading your full-size SUV in the near future, be prepared for a shock.

With rising fuel prices, the value of gas-guzzler SUVs and trucks have been dropping as demand declines. Dealers are no longer interested in paying full trade-in value for such vehicles because they know the vehicles are going to be tough to sell from their used-car lot.

Essentially, here's how it works. In the past, a dealer would evaluate a trade-in vehicle's value based on mileage and condition, and offer the customer a (hopefully) fair price. Now, things have changed. Dealers are making price offers as if the vehicle had higher mileage and was in worse condition to make a lower offer. Customers who have done their homework and have researched trade-in prices with Blue Book or NADA price books will often find that dealers are not offering those prices any longer. Customers often feel cheated and don't understand why they aren't being offered a "fair" price.

The reality of this situation is that vehicle prices, particularly trade-in prices, change with market demand. Market demand can change quickly and be affected by all sorts of factors, including day-to-day fuel prices in the case of SUVs. Dealers stay in business by being aware of such changes in demand in order to adjust prices to compensate for the changes.

Car Buying Scam Back in Full Force

You would think that everyone has heard about the infamous car buying scam by now, but I get new emails at a rate even higher than in the past.

Visitors to my Used Car Advisor scam alert page (www.used-car-advisor.com/car-buyer-scam.htm) see the article because they're selling a used car and get an offer that looks a little fishy to them. They then search and find my article, which confirms that the deal is a scam. They are then very appreciative and send me copies of the emails from the scammer. We post many of them in the article to help others avoid getting caught in this very damaging fraud scheme.

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Dealers Can't Wait Until Your Loan Ends

Car dealers are now looking at new ways to get customers back in the showroom, according to Automotive News, several years earlier than the customer might have planned.

With 60 month, or longer, loans, customers don't see dealers often enough, so dealers say. Dealers know that many customers often begin to get the itch at around 36,000 miles when the manufacturer's warranty runs out and maintenance costs start to increase. However, in most cases, the customer is upside down on his loan.

The concept is one in which dealer salespeople are trained to contact mid-term customers and explain to them that being upside down is not a bad thing, and that it's possible to get into a brand new vehicle if they trade now.

Here's the potential catch. The new vehicle deal is a lease, which means that even after the negative equity from the old loan is rolled in, the payments won't seem so bad.

There is nothing inherently wrong with this concept or with leasing, assuming 1) the negative equity is not so large as to require a large down payment to help pay it off, 2) the customer is qualifed to lease (drives no more than 15K miles per year and understands how leasing works), and is willing to stick out the lease until the end. If, after the first lease, the customer decides to lease again, payments will likely go down dramatically because there is no negative equity being rolled in the second time around.

To understand leasing, see LeaseGuide.com.

Is a Hybrid Car in Your Future?

Hybrid vehicles have suddenly turned hot. Rising gas prices combined with concerns about the environment have created a revived interest in gas-electric hybrid cars, trucks, and SUVs. New Federal tax incentives in 2006 have also helped cause automotive consumers to take notice.

When Toyota introduced the Prius in 2000, it was the only choice. It was expensive, performed poorly, unattractive, and used unproven technology. However, new hybrids from Toyota, Honda, Lexus, Chevrolet, and Ford represent major advances.

Prices have come down significantly, making hybrids not only affordable, but easy to justify when savings in fuel cost are considered. New hybrids are stylish and are often difficult to distinguish from their non-hybrid siblings. The new 2007 Toyota Camry Hybrid has all the great looks and features of the best-selling non-hybrid Camry.

For more details about currently available hybrid vehicles and to view actual owner reports, see Hybrid Vehicle Buyer Reports.