Whether you’re buying a car online, from a dealership or from a private party, it’s important to know what the car is worth. A car’s value depends on a number of factors like its age, mileage, condition, trim level and the location where it’s being sold. For every vehicle, there are two prices: retail and wholesale.
To get the best deal on a used car, it’s important to know the difference between these two numbers. Later in this post, we’ll also cover what “asking price” means so that you can be an effective negotiator.
Retail Price
The retail price is always higher than the wholesale price and what you would expect to pay for the car if it was being sold at a dealership. If you are buying the car from a private seller, you’ll probably pay a bit less. Retail prices are also higher because the dealerships are banking on you getting less from the trade-in, giving them a profit margin.
Wholesale Price
Wholesale pricing is essentially a car’s trade-in value at the dealership. The dealer will then turn around and sell it to someone else for a profit. Understandably, trade-in prices are a lot lower than retail prices. You’re not likely to find a car being sold at a wholesale price, unless you shop for a repossessed vehicle through RepoFinder.
In the wholesale end of business, there are different figures to be aware of. Every step of the way, there’s a middleman that takes their cut, which ends up giving the car a new value.
- Trade-in. This is what the dealer is offering the customer. What they get for trading in their car can be used toward their next vehicle purchase.
- Dealer-to-dealer. This pricing happens when one dealer sells the car to another.
- Auction. If the car goes to auction, which many do, it will have an auction price. Dealers and brokers often buy cars at auction for resale.
Asking Price
When shopping for used cars, you’ll definitely come across the term “asking price.” This is different from retail and wholesale prices – and it’s negotiable. The asking price refers to the amount the seller is asking for the vehicle. But, dealers and private sellers know the customer will probably come back with another offer, which is why this price is not set in stone.
Shop for Cars at Wholesale Prices
Now that you are aware of this car shopping lingo, you can be a more effective shopper. RepoFinder is a directory of banks, credit unions and public auctions that sell repossessed cars directly to the public. There are no middlemen, allowing you to work out a deal between you and the seller. To start shopping for an affordable vehicle that rivals wholesale prices, shop with RepoFinder today.