Are you looking to get rid of your current vehicle? You’ve got several options: You could put a “for sale” sign in the window of the vehicle and hope an interested passerby spots it. You could list the car in the automotive classifieds or on Craigslist and field calls and emails from potential buyers who will likely haggle over price. Or, you can simply trade in your auto to a dealer and purchase a new one.
Trade-ins are fairly common – the process is fast and maybe the easiest way to get rid of your used car. However, some people avoid trade-ins entirely, preferring to weed out potential buyers themselves than bargain with a dealer. However, private party sales aren’t as simple as they might seem. Before dismissing the idea of a trade-in, learn what you may gain from going that route, and reconsider the potential risks.
Advantages of Trading In a Car
When deciding the best way to get rid of a car, there are several factors to consider. Before attempting to sell the car yourself, understand how a trade-in can help.
1. You Only Deal With the Dealer
If you trade in your car, the dealer handles the entire transaction from start to finish. All you need to do is show up, negotiate the deal, and you’re one step closer to buying a new car. While there are definitely benefits to selling a car yourself, trading in a car is the better option if you simply don’t have the time or desire to market your vehicle.
2. It’s Fast and Convenient
Private party sales take time and effort: There’s the task of advertising the car, meeting with potential buyers, and transferring ownership. It can take several weeks or even months to find a buyer. On the other hand, when you trade in your car, you can get rid of your old car in a day or two.
3. It Reduces the Price of Your New Car
If you own your car outright, the dealership will apply your trade-in amount to your new vehicle. For example, if you purchase a car for $25,000 and the dealership gives you $6,000 for your trade-in, you only need a loan for $19,000. And because the dealer knocked several thousand dollars off the final price of your automobile, you pay less in sales tax.
Disadvantages of Trading In a Car
Trading in a car isn’t always the best option. Consider the negatives before making your decision.
1. You May Get Less Money for Your Car
There’s no doubt that trading in a car to purchase a new one is simple and convenient. But too often, the amount offered by dealerships is much less than the private party value.
For example, the private party value of a 2009 Toyota Camry XLE in excellent condition with 30,000 miles is approximately $19,479. However, the trade-in value for the same car in the same condition is only $17,426 – a difference of about $2,000.
2. You Limit Where You Can Buy a Car
When a dealership appraises your car and agrees to buy your car, you’re obligated to buy your next car from that dealership. If the dealership doesn’t have a car that you want, you can’t trade in the car. There is no provision that allows you to trade in a vehicle at one dealership and purchase from another, nor at a later time.
How to Trade In a Car
If you decide that trading in your car is your best option, it is important to learn how to get the most money out of the transaction.
1. Know Your Car’s Value
Dealers always want to pay the least amount possible. For this reason, some attempt to low-ball the consumer with a price that’s below the net value of the trade-in.
If you don’t know what your car is worth, you’re likely to accept any offer. Therefore, do your own research before stepping foot on the dealer’s lot. Go to Kelley Blue Book online and enter the make, model, year, mileage, and condition of your car to learn the trade-in value. Print a copy of this information and bring it to the dealership.
2. Fix Up the Car
Any cosmetic damage to your car can lower its net value and cause a low trade-in value. You don’t have to give your car an entirely new paint job, but it doesn’t hurt to clean up the interior or exterior a bit before speaking with a dealership. Shampoo the carpets, drive the car through a car wash, purchase touch-up paint to conceal minor scratches, and repair dents. Simple repairs can add significant value to your car and increase the trade-in offer.
3. Shop Around
Shopping around does more than get you the best interest rate on your auto loan or the lowest price on your new car – it also helps you get the most for your trade-in. Visit multiple dealerships and request an estimate to learn the value of your trade-in. Keep copies of your quotes and use this information as a bargaining chip.
Depending on the dealership, you might get more money for your trade-in if you buy a more expensive car, rather than a cheaper model. Also, consider shopping for a new car toward the end of the year. This is when dealerships receive the new year’s inventory, and they’re usually eager to unload the previous year’s models. If you’re buying a model from the previous year, dealers are likely to offer more for your trade-in to encourage a sale.
Ultimately, dealerships want your business, and they need to sell cars. For this reason, they’re generally ready to accept your trade-in and negotiate a fair price. Of course, some dealers will try to undercut you – so do your research and familiarize yourself with the process, and you’re sure to get the most money possible for you car.
Do you believe that the pros of trading in a car outweigh the cons? What other trade-in tips can you suggest?