There are many reasons why you might want to trade your old car for a new vehicle. Maybe your family is growing, you’re moving to a new city, or it’s just time for an upgrade. Whatever your reason, trading your car can be a great option.
The trade-in process can dramatically reduce the work associated with selling a car, which includes advertising, arranging test drives, and negotiating with buyers. With a trade-in, you can simply take your vehicle to the dealer and leave in another car. Plus, the money you get for the trade-in can be used towards your next car purchase.
While the trade-in option may not squeeze every penny of value out of your current vehicle, it’s worth considering if you’re looking to buy a new car. Here’s what you need to know about getting the best price for your trade-in.
What is your Trade-in Value?
The first question to ask when considering a trade-in is, “how much is the car?” An easy way to find out is to look for cars that are similar to yours online. You can consider the make, model, and year of the vehicle, as well as the number of miles and condition. Make a list of similar used cars and their prices, then use that list as a comparison when determining your trade-in value.
Another option is to use an online tool to check your car’s current retail value based on car data from all over the internet. Cars and Drivers offers a free car value calculator which you can view here. You simply enter information about your car, such as make, model, year and mileage to get a price estimate.
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How to Get the Best Price for Your Trade-in
Here are some tips for getting the best price for your trade-in vehicle:
Get Lots of Offers
The expression “buy your vehicle” refers to the process of taking it to a number of dealers to find out what trade-in values they are willing to offer. The first offer you get will not necessarily be the best.
Consider visiting at least three car dealerships for different trade-in offers. Whenever you visit, ask for a written record of their trade-in offer so you can easily track your offer and prove the value of your car at a later date.
Getting lots of offers is helpful for several reasons. First, you learn where you can sell your car for the most money. It also helps when it comes time for negotiations. Even if the dealer offering the highest value for the car isn’t the dealer you want to do business with, you can use their offer to argue for a higher trade-in rate at your chosen dealer.
Negotiate Your Trade-in Price
It’s important to remember that the first price a dealer issues is not necessarily their final quote. It might surprise you how good a small deal you can get, especially if you do your homework. Before heading to the negotiating table, research your car’s value and understand all the contributing factors.
Negotiating your trade-in agreement separately from your new car purchase can also help. Many dealers offer to create a quick one-deal process, but that makes it easier for dealers to hide fees and maximize their profits.
Manage Your Car Exchange Time Well
If you can wait to buy a new car, it can help you get a better exchange rate. For example, if your current car is a convertible, you’ll probably get more value in the spring and summer.
If your vehicle is currently in high demand in your area, sell it as soon as possible for the most money. You should also pay attention to the car market. As car prices increase, you can expect to get a higher added value for your vehicle, especially if it is well maintained.
How to Increase Your Car’s Trade-in Value
There are several ways to maximize the value of your car before you trade it in. Here are some suggestions for increasing market value.
Get Up To Maintenance
Before you trade in your vehicle, make sure it’s up for maintenance. While spending money on the vehicle you’re looking to trade in may seem counterintuitive, it can help increase your used car trade-in value. You should also collect your maintenance records and take them to the dealer. It shows dealers and potential buyers how well the car has been cared for over its life and what maintenance was recently performed.
Car Wash and Detail
It’s a good idea to take your car to a car wash before you trade it in. If you don’t want to spend money on auto detailing, it’s best to take your vehicle through a car wash, clean out the trash from the inside, and vacuum up any crumbs that may have accumulated over the years. Don’t forget to remove personal items from hidden areas, such as the luggage compartment and center console.
Do Basic Repair
If your car is showing signs of wear and tear, doing a simple repair can increase the trade-in value significantly. For example, if there are large dents, scratches, or chips of paint on the exterior of your car, consider repairing them.
If the windshield is cracked, repair the crack or replace the glass. Again, it may seem unnecessary to put money into the vehicle you are about to get rid of, but it can benefit you financially in the long run.
Do You Pay Taxes When You Trade in Your Vehicle?
When you trade in a car, most states charge sales tax on the difference between the value of the old car and the price of the new car. For example, if you trade in a car with a market value of $10,000 and you buy a new car that is valued at $15,000, you only have to pay sales tax on the $5,000 difference. If your old car has the same market value as your new car, you may be able to avoid paying sales tax altogether.
Do You Get a Better Deal When You Trade in Cars?
It’s hard to say whether you get a better deal when you trade in your car than you sell it. It depends on many specific factors. In general, selling a car will usually get you a better price, whereas selling a car will likely be an easier experience.
What is the Car Trade-in Rate?
The typical exchange rate for a car depends on the make, model, year and mileage. But even after factoring those elements into your calculations, the typical trade-in rate can vary dramatically based on the current car market. Your best bet is to use an online calculator to determine the current value of your trade-in vehicle.
What Is Considered a Rough Trade-In?
A “rough trade-in” is an industry term for a vehicle with significant exterior or interior damage that an owner wishes to exchange. This damage may require extensive repair or restoration for the car to function properly. If your car is in bad shape, you probably won’t receive much money for it.
Is the Exchange Value Added Higher Than the Selling Value?
In most situations, your car’s trade-in value will be less than what it was sold for. While you can usually make more money selling your car than trading it in, selling your own car is a daunting task. For some people, trading their car is a better option if they can avoid the hassle of selling a private car.
Can I exchange my car for a loan?
Yes, you can trade in a car you’re still paying off. However, your loan payments will not stop. You can use the money from your trade-in to pay off the loan, or you can roll the remainder of your loan payment into a loan on a new car.
Finance & Insurance Editor
Elizabeth Rivelli is a freelance writer with over three years experience in finance and personal insurance. He has extensive knowledge of various lines of insurance, including auto insurance and property insurance. His byline has appeared in dozens of online financial publications, such as The Balance, Investopedia, Reviews.com, Forbes and Bankrate.