How to Trade In Your Car – Dealer Tips & Tricks

Trading in your old car when buying a new one is an easy way to get out of the hassle of selling it to the public.

However, dealerships are businesses looking to make a profit, so they’ll try to pay you as little as possible for your trade-in.

I created the guide below from the perspective of a former used car dealer to give you some insight into the process that I think most guides miss.

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Related Articles to Read:

• Do You Need the Title To Trade In Your Car
• Is It Better To Trade in or Sell Car
• When Should You Sell Your Car?
• The Best Trade In Value Car Dealership

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Know Your Car’s Actual Market Value

The first step in getting the most money for your trade-in is to know what it’s actually worth.

Don’t just rely on the dealership’s appraisal, as they will usually lowball you to maximize their profit. There’s nothing wrong with that by the way, it’s strictly business!

TIP: The first offer from the dealer is never their best offer by design. They expect you to negotiate and will have room to increase the trade-in value.”

Instead of taking the dealers word for it, do your own research:

• Use pricing guides like Kelley Blue Book, Edmunds, and NADA to get a baseline value for your car based on its make, model, year, mileage, and condition.
• Check prices for similar vehicles being sold privately in your area to gauge the market value. It’s important to remember that your car will always sell for more money when sell to a private party.
• Get trade-in quotes from multiple sources, such as Carvana, CarMax, and Vroom, to use as leverage in negotiations.
• Look at auction data (like Black Book and Manheim) to see what dealers are paying for cars like yours at wholesale prices.
• Have your car appraised at CarMax to get a written offer that you can use as leverage when negotiating with other dealerships.

Remember, the condition of your car plays the biggest role in its value next to the market value.

When I look at a car, I look at the overall condition – the mileage, any damage, quality of repairs, and how well it’s been maintained.

TIP: Be honest about any damage, wear and tear, or mechanical issues upfront. If I found something a customer didn’t mention I start looking much harder for more problems under the assumption they’re probably hiding more.

Prepare Your Trade-In to Maximize Value

Before bringing your car to the dealership, take steps to make it look its best and increase its perceived value:

• Have your car detailed inside and out to create a great first impression. “Dealers want used cars, especially when they’re in good condition and only a few years old. Used car sales are much more lucrative for dealers.
• Fix minor issues like scratches, dents, or replacing worn tires.
• Gather all service records to demonstrate a proper maintenance history. This shows the dealer you’ve taken care of the car inside and out.

TIP: Don’t spend too much money on major repairs, as dealers expect to recondition trade-in vehicles themselves.

Separate the Trade-In Negotiation from the New Car Purchase

Experienced dealers often try to combine the trade-in and new car pricing discussions to confuse you and obscure the actual value of your trade-in. To avoid this tactic:

• First, negotiate the best possible price for the new car you want to buy, without mentioning your trade-in.
• Once you’ve agreed on the new car price, bring up your trade-in and the offers or valuations you’ve received from other sources. “If you have leverage in a car deal right now, it’s on your trade-in.”
• Don’t disclose that you’re trading in a car until after settling on the new vehicle’s price to prevent the dealer from inflating it to offset a higher trade-in value.

Be Prepared to Walk Away

One of your most powerful negotiating tools is the willingness to walk away if the dealer’s offer isn’t satisfactory:

• If their trade-in offer is significantly lower than your research suggests, politely decline and get ready to leave.
• Don’t counter with your target price; simply state that you’ll need to think about it and explore other options.
• If a manager gets involved and still doesn’t make a good enough offer, thank them and leave.
• Remember, you can always come back if they call with a better offer later. Dealers hate losing a sale over a small amount.

Consider All Your Options

Trading in your car isn’t always the best choice, particularly if you owe more on your loan than the vehicle is worth (known as being “upside down” or having negative equity):

• Selling your car privately or to online retailers like Carvana will usually net you more money than trading it in at a dealership, especially if the dealer’s offer is significantly lower than the market value.
• If the tax savings from trading in exceed the higher price you could get from a private sale, it may be worth accepting the dealer’s offer.
• Rolling negative equity into a new loan is generally not advisable, as it perpetuates a cycle of debt.

TIP: Don’t roll negative equity into a new loan—it offends end up in a cycle of never ending car loans that get higher and higher. If you’re upside down, try paying down the loan more aggressively, or consider a private sale instead of trading in.

Pros and Cons of Trading in vs. Selling Privately

Option	Pros	Cons
Trading in at a dealership	– Convenient one-stop process- Can save on sales tax in some states- No need to deal with private buyers	– Lower overall value compared to selling privately- Dealership may try to lowball you on the trade-in value
Selling privately	– Typically fetches a higher price than trading in- More control over the selling price	– Time-consuming process- May involve dealing with strangers and handling paperwork- Requires more effort in listing, showing, and negotiating the sale

Timing Your Trade-In

The time of year and current market conditions can impact your car’s trade-in value:

• Convertibles and sports cars typically fetch higher prices in the spring and summer.
• Trucks and SUVs are often in higher demand during the fall and winter months, especially when gas prices are low.
• If you have a hybrid or fuel-efficient vehicle, it may be worth more when gas prices are high. When gas prices go up, more people look at hybrids and EV’s and that drives up prices.
• Dealers may be more motivated to give you a better trade-in offer at the end of the month or quarter when they’re trying to meet sales quotas.

Insider Tips and Tricks

Here are some additional insider tips and tricks from former car dealers and salespeople:

• Negotiate the trade-in value separately from the new car price to avoid getting lowballed on both.
• If you have a loan on your current car, try to pay it off before trading in to get more value and avoid negative equity.
• In some states, you may not have to pay sales tax on the trade-in value, which can save you money on your new car purchase.
• Be cautious of dealers who offer high trade-in values but inflate the price of the new car to compensate.
• Get your trade-in offer in writing to prevent the dealer from changing it later. “Having the trade-in value in writing protects that number during purchase negotiations and prevents the dealer from lowering it later.”
• If a dealer is unwilling to properly inspect your trade-in or is rushing you to make a deal, it’s a sign that you likely won’t get the best offer from them.

2024 Trade In Trends

• Trade-in values hit an all-time high during the pandemic due to tight new vehicle supplies
• Trade-in values have been declining recently as used car prices cool off and more inventory becomes available
• The percentage of trade-ins with negative equity increases when used car values decline

My Final thoughts

Using the insider tips and strategies I provided, you’ll be well-equipped to navigate the trade-in process and get the most money for your vehicle. Remember to do your research, be prepared to negotiate, and don’t be afraid to walk away if the offer isn’t right.