Part exchange - revaluation

harty236

Hiya - I have a question relating to part exchanging my car. It's currently on finance and the new car will also be on finance. The cars both came from the same dealer and the finance house is also the same.

When I originally signed the finance agreement in June my car was given a certain part exchange value and given the balance on the finance, the equity in the car was assumed to be £400. I knew the car would be delivered in Q4 and asked the dealer what would happen to the increase in equity I would receive on the car between signing the deal and collecting the car. I was assured that "the depreciation on the car would match the decrease in finance balance" so my equity would not change much if at all. It was on this understanding that I signed the agreement.

Now due to the global chip shortage, used cars are retaining value more than ever and using a webuyanycar valuation, I've calculated my current equity stake in the car to be closer to £2500. This means if I do hand the car over at the previously agreed price I'm getting royally ripped off. So:

1. Do I HAVE to hand over the car at the agreed value? I have documents with this value signed by both parties.
2. Can I ask/force the dealer to revalue my equity as (whether deliberately or not) he misrepresented the assumed future equity in the car? Unfortunately I don't have this in writing...
3. Can I ask/force the dealer to pull the PX portion out of the deal, pay the cash equivalent of the assumed equity at the time (£400) then sell the car myself?

Any answers greatly appreciated.

jimjames

1. No but you would have to pay the difference
2. No. You can ask but not force
3. Yes, how you complete the contract is up to you but you'd need to make up the difference in cash if you are selling elsewhere

Grumpy_chap

Normally when you agree a trade-in value, the paperwork includes a clause for the valuation to be adjusted at the actual date of trade-in.  This is really to protect the garage as the car may have been damaged or mechanically failed during the 10-week lead time for a new car.  That is "normal times" but, as you noted, these are not "normal times".  

Check the paperwork to see what it says about adjustments to the trade-in value.  If there is a clause that covers adjustments to value, it should work in both directions.

The paperwork is also key to the other questions you asked, but answering the specific questions on what is "typical":

1. No, not usually.  I have in the past agreed to trade-in a car, and then kept the old car in addition to new.  Unless there was a price incentive specifically linked to the trade-in ("scrappage" or similar) it should not matter.  You agreed to buy a car for £x, of which £y would be covered by the trade in.  Normally, you can simply swap £y for the £y trade-in value.

2.  Yes, you can ask.  They may revalue up or down.  I would not go commenting about "misrepresentation" as that will get their back up.  Similarly, no point in trying to "force" - a friendly approach will be more likely to achieve an amenable outcome.

3.  Almost certainly.  But again, ask rather than "force".  You don't even have to sell the PC but could keep it as a second car as far as the dealer knows.  Maybe you are too sentimentally attached to it to let go.  

For options 2 & 3, it is worth checking what the car will actually obtain from WBAC or Motorway before starting any discussions with the dealer.

Good luck.

BOWFER

Out of interest what's the model and age of the car you're trading in?
Just wondering if the dealer would be interested in keeping it in their stock, and you're therefore taking away the option of a profit on it, or if they'd just punt it off to auction and get what they can for it.

Jenni_D

If they've only offered £400 part-ex valuation then I have my doubts that they'd keep it as dealer stock ... unless the OP was already getting royally ripped off with the valuation.

Grumpy_chap

Jenni_D said:

If they've only offered £400 part-ex valuation then I have my doubts that they'd keep it as dealer stock ... unless the OP was already getting royally ripped off with the valuation.

I read that initially, but I don't think it is what the OP was saying:

harty236 said:

When I originally signed the finance agreement in June my car was given a certain part exchange value and given the balance on the finance, the equity in the car was assumed to be £400. I knew the car would be delivered in Q4 and asked the dealer what would happen to the increase in equity I would receive on the car between signing the deal and collecting the car. I was assured that "the depreciation on the car would match the decrease in finance balance" so my equity would not change much if at all. 

I really think the OP was saying the trade-in value is "current outstanding finance" plus £400.

The Dealer then answered the question about change in value between June offer and car delivery, responding in the basis that the car would go down in value but offset by the finance paid in the remaining months, so the OP still gets £400 back.

What the OP now believes has happened is the car value has gone up, so the trade in value should be somewhat higher than initially offered.

BOWFER

Jenni_D said:

If they've only offered £400 part-ex valuation then I have my doubts that they'd keep it as dealer stock ... unless the OP was already getting royally ripped off with the valuation.

Don't think that's what he meant, as he says the value has jumped up by £2500.00
I know used car prices are mental just now, but £400 cars aren't suddenly worth £2900.00

Jenni_D

Thanks - I'd skimmed over the word "equity" 🙄

SaverRate

Give the garage a call and find out if they will either match the value or let you sell elsewhere and pay the cash difference. If you do go elsewhere have you looked at Motorway to sell your car - I dont work for them but have used them 6-7 times and always very good no issues. Much better than WBAC

Jenni_D

Will the market pricing for used vehicles still be as strong in December?

The other factor to consider is convenience ... with part-ex the OP turns up in their old vehicle and departs in their new vehicle. Selling elsewhere may mean that they are without a vehicle for a period. (Yes, they could hire a car for any gap, or use taxis, but what if the new car gets delayed and they've already sold the old one?)

Ultimately the OP has received useful advice in the replies here, so can make up their own mind on how they wish to proceed.

WaywardDriver

When part-exchanging my car against a new car with several months delivery time, the contract said the part-exchange value would be adjusted when the new car arrived. The dealer explained this used a standard industry guide - something like Parkers. I was sceptical but the new value turned out to be a few hundred more than original one - this was several years ago.
So you should examine your contract to see if there's a similar clause.