If the idea of selling your car on your own isn’t something that interests you, that’s where trading in your car to a dealership comes in.
However, Trading in does mean you’ll get less money, and although you might not be dealing with the public, you wil be negotitating with skilled professionals who know how to squeeze out every last dollar from a deal.
Below is a guide I created from my years of experience as a licensed dealer in Florida. By the end of this article you will know the ins and outs of how to trade in a car, especially how to get the most money for your trade.
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Table of Contents
How Does Trading In a Car Work?
When you trade in a vehicle, the dealer assesses its value and offers you a trade-in price. This price gets subtracted from the negotiated cost of your next car.
However, if you still owe money on the car you’re trading in, the dealer will pay that amount off on your behalf, and this too would become part of the deal.
When you trade in a vehicle, the dealer assesses its value and offers you a trade-in price. This price gets subtracted from the negotiated cost of your next car.
For example, let’s say you owe $15,000 still on your current car loan. The dealer appraises your trade-in value at $20,000 and you’ve negotiated the new cars price down to $30,000.
In this case, the dealer would pay off the $15,000 loan balance when you trade in your old car. Since your car is worth $20,000 as a trade-in and you owed $15,000, you have $5,000 in positive equity.
This $5,000 equity gets deducted from the $30,000 new car price, lowering the total financed amount or out-of-pocket payment to $25,000.
- Positive equity – Your car’s worth exceeds loan balance. The extra value reduces new car price.
- Negative equity – You owe more than car’s worth. You pay the difference in cash or roll into new loan.
Remember: Trading in provides convenience but will almost always result in getting less money for your car than it’s actually worth.
Weigh the pros and cons below to decide if it meets your needs.
Pros of Trading In
- Faster, simpler process than private selling
- Trade-in value applied directly to new car
- Potential tax savings in some states
Cons of Trading In
- Dealers tend to offer below full car value
- Limited to sourcing both vehicles from same dealer
- Lower profit than private party sale
Key Steps for Trading In Your Car
Follow these key steps when trading in your current vehicle on a newer model:
1. Get Trade-In Value Estimates
Research trade-in values on sites like Kelley Blue Book and Edmunds. Getting multiple quotes, including offers from dealerships, gives you pricing leverage.
2. Gather Necessary Paperwork
Collect documents like title, registration, auto loan details, and service records to streamline the process.
3. Make Minor Fixes and Improve Curb Appeal
A cleaner car earns higher offers. Handle small repairs and give it a good detailed cleaning inside and out.
4. Shopdealer Offers and Negotiate
Obtain offers from dealers and negotiate the best trade-in price separately from your new car purchase.
5. Review All Terms Before Signing
Carefully check contract terms match negotiations before signing. Verify loan payoff a few weeks later.
Below we cover what to know at each step and considerations like trading in leased or financed vehicles in more detail.
Common Dealer Trade-In Tactics and Counters
While most dealers aim for fair deals, some use tricks targeting uninformed customers. Be ready to counter:
Extreme Lowball Offers
Tactic: Initial quotes far below actual value to allow maximum profit on resale.
Counter: Negotiate up based on third-party pricing research. Walk away if significant gaps remain.
Bundling Transactions
Tactic: Link trade-in price with new car price to obscure profit padding .
Counter: Insist on discussing as separate transactions. Get written offers before committing.
Pushing Their Financing
Tactic: Claim issues with your financing to push incentives-tied dealer financing.
Counter: Only accept if terms demonstrably beat your pre-arranged loan.
Hidden Fees and Add-ons
Tactic: Slip in unnecessary items like extended warranties without consent.
Counter: Review paperwork thoroughly. Push back on unagreed add-ons.
Drawn Out Negotiations
Tactic: Wear you down with tedious haggling to accept a bad deal.
Counter: Come prepared with research, set time limits, and be ready to walk.
Determine Your Car’s Trade-In Value
Getting accurate valuations from multiple sources puts you in a strong negotiating position when trading your car in to a dealership. Here are some best practices for setting your trade-in target price.
Check Online Pricing Guides
Obtain estimates from established pricing guides like Kelly Blue Book and Edmunds. Be sure to select the trade-in value, not higher retail estimates. Accurately describe year, make, model mileage, location, and condition.
Request Quotes from Multiple Local Dealers
Contact at least three local dealers to have them assess your vehicle and provide firm trade-in offers. Consider starting with the dealer you purchased from originally since established relationships can equate to better pricing.
Weigh Instant Online Offers
Many sites like TrueCar and Vroom give quick online offers, if available in your area. Just keep in mind, you can’t negotiate these prices. If being able to negotiate matters to you, an independent dealership may be a better option.
Prepare Your Vehicle for Trade-In
While cleaning and minor repairs probably won’t boost your trade-in value above quotes received, freshening up your vehicle does impact dealer perception during in-person appraisals.
Perform Minor Repairs
Address minor mechanical issues and cosmetic flaws like chipped paint to improve condition. But don’t spend more than your potential valuation increase.
Give Your Car a Thorough Detail
Vacuum the interior, wipe surfaces, steam clean upholstery and carpets. Wash and wax the exterior. A cleaner vehicle leaves a better impression.
Fix Identified Problems
If the dealer spots issues you didn’t disclose during initial quotes, consider addressing defects. Hiding problems can reduce offers.
Gather Service Records
Proof of consistent maintenance makes dealers more confident in higher valuations and reselling potential.
Trading In a Financed or Leased Vehicle
If you still have outstanding auto loan payments or are mid-lease, additional steps ensure a smooth trade-in experience.
Payoff Amounts for Loans
Contact your lender for the up-to-date payoff quote, including interest, to settle your loan. Provide the auto loan details to the dealer.
Buy Out Leases Beforehand
To trade a leased vehicle, first pay any fees and dues to buy out the lease from the leasing institution so you own the car.
Manage Upside-Down Situations Carefully
If you owe more than the car’s value, expect to pay the difference out-of-pocket unless special deals apply to roll remaining balance into your next car loan. This creates higher payments and interest costs long-term by increasing principal amount, so consider it carefully rather than as an easy fix. Plan ahead to trade-in at lease end or when positive equity exists in your loan whenever possible.
Finalizing the Deal and Trade-In
Take the necessary steps to get properly credited for your trade-in when closing the deal on a newer vehicle.
Negotiate Separately from New Car Purchase
Discuss trade-in figures independently from negotiating the new car sales price. Combining them reduces your leverage in getting the best deal.
Review All Terms Thoroughly
Carefully go through every contract term before signing and double check figures against your own calculations on a spreadsheet. Don’t hesitate to ask questions.
Confirm Account Payoffs
A few weeks after the purchase, verify your old auto loan shows a $0 balance, indicating the dealer properly paid it off as agreed during your trade-in.
Weighing the Option to Trade In
Trading in your vehicle makes upgrading to another easy and convenient but also comes with drawbacks to weigh. Consider the following:
Benefits
- Saves time – avoid privately selling your car
- Use trade-in value as down payment on next vehicle
- Possible tax savings depending on local laws
Downsides
- Dealers tend to lowball trade-in quotes
- Limited to buying from dealer taking trade-in
- Lower profit versus private party sale
If you’re not in a hurry, selling privately could earn you more money. But if convenience matters most, trade-ins simplify upgrading vehicles. Either way, use the guidance above to negotiate a great overall deal.
Sources For This Article:
- https://www.reddit.com/r/TheGirlSurvivalGuide/comments/12ubvjo/request_how_to_not_get_taken_advantage_of_at_the/?rdt=35839
- https://www.audimv.com/blog/2023/may/14/avoiding-car-trade-in-mistakes.htm
- https://www.caranddriver.com/auto-loans/a41994497/how-to-get-best-price-for-trading-in-car/
- https://www.lithia.com/research/car-selling/trade-in-mistakes.htm