10 cars to trade-in now for maximum return

It’s never been a better time to trade in a late-model vehicle on a new one, as dealers are going all out to amass a fresh supply of used cars and replenish what’s become a severely depleted inventory. And they’re offering top dollar for them in trade, with some of the most in-demand models in excellent condition commanding 70 percent or more of their original sticker prices as three-year-old cars.

Keep in mind those numbers are for a vehicle’s trade-in value, which can be around 15-20 percent less than the amount a dealer would ultimately ask for a reconditioned used model.

Cars To Trade-In Now For Maximum Return

While this means sky-high prices for those looking to purchase a pre-owned car, it’s a bonanza for owners of late-model cars looking to upgrade their rides. Getting more in trade for your existing car means you’ll have additional cash to use as a down payment on a new model. With interest rates at all-time lows, some owners may actually be able to whittle down their monthly car payments by trading in their existing vehicles for brand-new ones.

What’s more, the sudden run-up in trade-in/used car values could likewise be beneficial for consumers having a car coming off-lease in the coming months. Lessees can typically buy a car at the end of the contract term at a preset residual value. If that amount winds up being lower than the car’s subsequent trade-in value, it would be possible to buy the car and immediately re-sell it – perhaps even back to the original dealer – at a profit. At the least it would mean buying a good-condition used car at a below-market price.

Today’s generous trade-in values can be largely attributed to a shortage of models in the used-car market. While exact figures weren’t available, Alec Gutierrez, manager of vehicle valuation for Kelley Blue Book suggests the nation’s used-car inventory may have contracted by as much as 25 percent since 2009. This is due to depressed new-car sales and a rollback in leasing that followed the economic collapse in late 2008, along with automakers dialing down their sales to rental-car fleets, all of which diminished the number of used models returning to dealers’ lots. In addition, 677,000 used cars – albeit older and less-desirable models – were taken out of the market by the so-called “cash for clunkers” program in 2009.

In strict accordance with the laws of and demand, this has enabled the average value of a one- to three-year-old vehicle to skyrocket from $15,000 in 2008 to more than $23,000 in 2011, according to Kelley Blue Book. That’s an increase of nearly 16 percent per year for what is otherwise a depreciating asset.

Dealers are willing – and eager – to pay whatever it takes to replenish their stock of late-model used cars for the same reason legendary criminal Willie Sutton said he robbed banks: “Because that’s where the money is.” Used cars are historically a more reliable source of profits for most dealers than new models. Dealerships that handle both new and used cars made an average net profit of $252 in 2010, while they actually realized a loss of $180 for each new model sold, according to data compiled by the National Automobile Dealers Association.

It’s certainly worth your time to check the current trade-in value of your car via one of the Internet’s valuation sites, like NADA Guides or Kelley Blue Book and consider whether it’s time to cash in on the equity.

We did just that, beginning with a long list of model-year 2008 cars and trucks that Automotive Lease Guide initially predicted would retain above average residual values after three years of ownership. We then consulted NADA Guides to determine their current estimated resale values for the Chicago area, assuming for the sake of argument, that each model was considered a “clean” trade-in (meaning no mechanical defects, only minor wear and tear and a clear title) with 46,500 miles on the odometer. We went back and checked their original MSRPs (manufacturer’s suggested retail prices) as published in the Consumers Digest 2008 New-Car and Truck Buyers’ Guide to determine the percentages of value each retained. Though trade-in values from other sources and for other locations we otherwise checked varied a bit (and dealers may in practice offer more or less for a given vehicle on a given day), according to NADA Guides all of the models in our top 10 list are estimated to return at least 70 percent of their original sticker prices as of mid-January 2012.

We checked current trade-in values for both base models and higher trim levels in each model line to see which fared better. For the most part, we found that minimally equipped versions tend to retain their value slightly better than fully loaded models, which in large part results from a higher price sensitivity among used-car buyers.

1. Jeep Wrangler

The original SUV traditionally commands among the highest resale values in the industry, particularly in relatively unadorned versions that off-road enthusiasts covet to customize with aftermarket add-ons. A model-year 2008 two-door Wrangler having clocked 46,500 miles in top condition is estimated to return a whopping 90 percent of its original retail price in trade-in value. The four-door Wrangler Unlimited version fares slightly better, holding onto 91 percent of its MSRP according to NADA Guides. By comparison the off-road ready Rubicon versions – which can be too rough for casual owners – retain 77 and 84 percent of their original sticker prices.

2. Mini Cooper

While the diminutive MINI Cooper isn’t for everyone, it’s a blast to drive and is particularly popular among young urban professionals for whom attributes like back seat room and cargo space are secondary considerations. The trade-in value for a base model-year 2008 Cooper in good shape and with 46,500 miles on the odometer is estimated at 77 percent of its original MSRP, says NADA Guides.

3. Toyota Tacoma

The demand for brand-new small pickup trucks may be shrinking, yet the compact Tacoma still commands top dollar as a trade-in. The base four-cylinder standard-cab model from 2008 fares well enough at 72 percent of its original sticker price, but those owning the more practical V-6-powered four-door DoubleCab could be offered as much as 87 percent of its original price in trade on a new model.

4. Mercedes-Benz G-Class

Though we often deride the boxy military-derived uber-luxury G-Class SUV as looking like the postal vehicle for some posh gated community, NADA Guides says it holds onto its trade-in value better than any other Mercedes from model-year 2008 at 78 percent of its original MSRP.

5. Honda CR-V

NADA Guides estimates this amenable compact crossover currently commands a resale value at 77 percent of its original 2008 sticker price. Used versions are likely to be in particular demand as new-model inventories are just catching up from shortages attributed to last spring’stsunami and earthquake in Japan.

6. Toyota 4Runner

Mainstream new-car buyers may have shunned traditional truck-basedSUVs in recent years because of high gas prices, yet there’s still a market among outdoor adventurers for go-anywhere vehicles that can also tow a boat or trailer. A shortage of used models means the model-year 2008 SR5 version of Toyota’s 4Runner can be expected to command as much as 74 percent of its original sticker price as a trade-in, with the top V-8-powered Limited version lagging behind only slightly at 70 percent.

7. Ford Mustang Shelby GT500

Speed never goes out of style, with the pavement-burning top V8-powered model in the venerable Mustang line from 2008 estimated to return 73 percent of its original sticker price in trade-in value. By comparison, the 2008 GT model can be expected to hold 67 percent of its original cost in trade, with the more-passive V-6 base version worth just 67 percent of its sticker price.

8. Chevrolet Silverado 1500/GMC Sierra 1500

General Motors’ offerings lead the pack among full-size trucks with substantial trade-in values from the 2008 model year. In clean condition with 46,500 miles driven, NADA Guides estimates the Silverado and Sierra’s basic regular-cab “Work Truck” versions can command an estimated 72 percent of their original sticker prices in trade.

9. Lexus GX 460

This is essentially Lexus’ upscale version of the Toyota 4Runner, for active families who prefer a posher ride as their daily drive. NADA Guides says current model-year 2008 GX470 owners can be expected to receive as much as 70 percent of what they initially paid for their vehicles in trade-in value.

10. Toyota Tundra

A highly regarded full-size pickup that sells in far less volume than any of the domestic entries, a smaller supply in the used-car market helps the 2008 vintage retain as much as an estimated 70 percent of its original cost in resale value according to NADA Guides.

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