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How To Trade in my car

How To Trade In My Car

Trading in a car may be advertised by those at the dealerships as the “Simpler” method of selling your car, and by all means- It is!  But don’t let that fact allow you to get taken to the cleaners.

Trading in a car is like any process at a car dealership, and if you are not prepared, the dealer will deprive you of your hard-earned money, so in this article, we will address many of the questions the average car buyer will has when it comes to trading in a car at the dealership.

Is It Better To Trade In Or Sell A Car?

Selling your car will be better for those who need more money, while trading in a car will be better for those who require more convenience.  Many people forget the sales tax when contemplating whether to trade in or sell their car

If you sell your car and purchase another with that cash, you now owe your states sales tax in full; however, if you trade in your car, you are permitted (In most states) to take the amount you were credited and deduct it from what will be taxed on the car you purchased. 

So, if the car you purchased was $20,000 and your trade-in was $8,000, you will only pay sales tax on $12,000.  

That savings isn’t usually enough to even get close to equalling the retail value of a private sale, but in some cases, it does tip the scale to make it an easier decision to trade.

What’s My Car Worth?

How Much Will A Dealer Pay Me For My Car

The biggest question, arguably the only one that matters, is how much will the dealer buy my car for?

We discuss this more in-depth in another article but for a simple explanation:  The dealer is going to buy your car for as much under wholesale (Dealer Auction) value as they can.  The dealer will inspect your vehicle and then run it through auction data to see what dealers are paying for that car in real time!

With this information, they can formulate exactly what they can get for the car at the auction if they are unable to sell it retail on their lot.  

You will fare better with a vehicle the dealer thinks they can sell on their lot.  Cars that a franchise dealer can certify (For example) will do the best.  Cars you are better off selling yourself are cars that a dealer can only take to the auction.  An example here may be a 10-year-old Ford you are trading in at a Honda dealership.  They simply don’t have the clientele to justify taking up space on their lot for that car.

How Do You Negotiate A Trade In?

If you are interested in the best method for Negotiating Your Trade-In, the first and only thing you really need to know is what we discussed in the previous paragraph:

How much is your car worth at the dealer auction?

After you get that number (Hopefully from our service), you then work it against your new purchase.  Yes, many people online will tell you to separate the trade-in from your new purchase, essentially making them two separate transactions by getting the dealer to buy your car first, only then revealing you are also a buyer.

My thought:  If your first act in the dealership is to deceive the people you are working with, what do you think their next move will be? 

Your best bet is to be the better person while always guarding yourself and your money.  If you try to beat the dealer at their own game- 

You Will Lose! 

Bottom Line On Negotiations:

The dealer can (In most cases) profit twice from a trade/purchase, and this should be used as leverage to barter a better deal, not to pick a fight and wake up the beast!

Trade-In Value (Service)

Autohitch Used Car Value and Pricing Service
Autohitch Used Car Value and Pricing Service

What Paperwork Do I Need To Trade In My Car?

To trade in your car at any dealership, you will need some paperwork, such as:

Required Paperwork for Car Trade-InDescription
Vehicle’s Current RegistrationThis document proves that your vehicle is currently registered.
Vehicle TitleThis is needed unless you still owe money on your loan, because you likely will not have it in that case. The title proves ownership of the vehicle.
Driver’s LicenseYour driver’s license is required to verify your identity.
Loan DocumentationIf you still owe money on the car, you’ll need to provide documentation of the loan and the payoff amount.
Paperwork needed to trade in a car

Paperwork not on this list that you should consider bringing are ads for cars similar to yours. This is going to help you negotiate a higher trade in for your vehicle.

Can I trade In A Car That Is Not Paid Off?

If you still owe money on your car and it has not been paid off yet, you will have to pay off the loan in full before being able to finalize any trade.  That being said, many dealerships will make your payoff amount part of the deal if you are buying another vehicle from that same dealership.

Still Owe Money On Trade In

How Soon Can You Trade In A Car You Financed?

This may shock you, but you can trade in a vehicle you financed anytime you want!  Whether that is a smart decision is a completely different story, but generally, you want to wait until you have equity on a financed vehicle before trading it in.  

Trading In A Car With Negative Equity

Also known as Being “Upside Down” or “Underwater“- When you owe more on your care than it is worth, you will be trading in a car that has negative equity.  

Bad Idea:

What people don’t often realize about rolling negative equity (Debt) into a new auto loan is that you are now making the next car more expensive than it’s actually worth.  Meaning:  You will be more likely to be even more underwater on this next car as well!

Can I Roll Negative Equity Into A New Car Loan?

Whether dealerships care or not, they cannot legally give you financial advice or tell you what they think is a good idea vs a bad idea.  If they can roll your debt into a new loan to get you into another car and you want another car, they have to comply.

So, be very careful and research your financial situation before trading in a car with negative equity, especially if you already have bad debt.

This post is a work in progress, and we will have more content for you soon!

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Steve Momot - Author

Steve Momot - Author

Steve, a seasoned expert in the automotive industry, formerly held a car dealer license in Florida. With extensive experience spanning across car trading and mechanical work, he founded Autohitch. His mission? To guide both buyers and sellers through the intricate maze of car purchasing, ensuring a seamless and informed experience. Outside of the automotive world, Steve has a passion for fishing and capturing the beauty of nature through photography.


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