When Is the Best Time to Trade-In Your Car?
People often discuss when to buy a car, or even when it’s best to sell, but what about trading in your vehicle.
Timing plays a huge role in the money you can get for a trade-in, so knowing when to is crucial.
We’ll dive into the key factors influencing trade-in value and the best and worst times to trade in a car.
Table of Contents
- When Should I Trade-In a Car?
- How Long Should You Keep a Car Before Trading It In?
- Should I Trade-in or Keep My Car?
- Where Can I Trade-In My Car?
- Car Models That Have a High Trade-In Value
- Best Car Deals by Category
- Frequently Asked Questions
When Should I Trade-In a Car?
So when is the best time to trade in your vehicle? Here are some top considerations for the timing of a trade-in:
Best Time of Year to Trade-In Your Car
You’ll often hear that the winter holidays are the best time to buy a new car, but when should you trade in a vehicle? Interestingly, there is a good time frame to trade in a vehicle. The values tend to be higher in the first two quarters of the year, and then drop for the last two quarters. This is because more buyers are in the market earlier in the year, and dealers look to feed the demand.
Additionally, the vehicle “seems” newer when it’s still 8+ months from turning a year older, vs. when that change is only a few months away.
Best Mileage to Trade-In a Car
One milestone to watch for trade-ins is mileage. Cars drop in value for about every 10,000 miles. However, there’s no set mileage line to watch for. As long as the vehicle is in good shape, it may still have enough value for a trade-in.
Keep in mind that dealers get a lot of low-mileage vehicles from leases, so they may have more room or interest in vehicles with moderate mileage to add variety to their lots.
Best Vehicle Age to Trade-In
Age is a much more important factor than mileage for trading in. Vehicles under 5 years old retain up to 70% of their value. However, after 5 years, cars drop significantly in value. Once the vehicle turns 5, the residual value drops significantly, and there won’t be much difference in the trade-in offer you’d get for the years after that.
Even so, some dealers will consider older vehicles. In general, the newer the vehicle is, the better the trade-in value.
Best Time to Trade-In a Car With a Loan
If you took out a loan to buy a car, then when should you trade it in? Ultimately, the answer will depend vastly on your individual situation.
However, there is the worst time to trade in a vehicle with a loan. Ideally, do not trade in the vehicle if you still have a balance on the loan and no equity. If you trade the vehicle in at this point, you’ll be “underwater” in the loan, owing more money than it’s worth.
To avoid being underwater in a loan, keep track of what you owe on the loan. Then, use a trade-in calculator to view the estimated trade-in value of your vehicle. Once the trade-in value is higher than the amount you owe, you can consider trading in the vehicle.
How Long Should You Keep a Car Before Trading It In?
How long you should keep your car before trading it in depends on several factors.
However, it’s often best to keep the vehicle for at least a few years after it’s paid off before considering trading it in. By keeping the vehicle for a few years after it’s paid off, you can enjoy the upsides of car ownership.
If you do not want to keep the car that long, only consider a trade-in once you have positive loan equity.
Should I Trade-in or Keep My Car?
Most often, deciding to trade in your car comes down to personal preference and your unique situation. However, there are a few key times when you should consider trading in your car and when you should keep it instead.
When to Trade-In Your Car
You should consider trading in your car when you are not desperate to do so. The less pressure you feel about buying a car, the more power and confidence you have to negotiate.
Beyond that, you should also consider trading in your car if:
- Paid Off Loan. You have equity in your car loan or paid off the vehicle.
- Good Trade-In Value. The trade-in value of your vehicle is promising.
- Need New Car. You’re interested in (but not desperate for) another vehicle from a dealership.
- Don't Want to Sell Privately. You don’t want to privately sell your vehicle.
When to Wait To Trade-In Your Car
Trading in your vehicle is not always the right move. Here are some instances when you should wait to trade in:
- When You Have a New Car. Vehicles depreciate up to 20% when you drive them off the lot. After the first couple of years, cars depreciate much slower. If you trade-in too early, you’ll have paid a lot in depreciation without enjoying the benefits of ownership.
- Underwater in a Car Loan. Generally, you shouldn’t trade in the vehicle until you have equity in the car. If you trade in a car before you have equity in the loan, you’ll owe more on the vehicle than what it’s worth.
When to Sell Your Car Versus Trading In
Trusted car appraisal services like Edmunds, Kelley Blue Book, and Autotrader often show significantly higher rates for selling a car vs. trading it in.
For one, you should get an appraisal for your specific vehicle to see the approximate difference between selling vs. trading in. However, consider that selling your car privately takes significantly more time and effort on your end. If you have a bit of time, then selling it may make more sense.
Where Can I Trade-In My Car?
There are many places where you can trade in your vehicle. Most dealerships consider trade-ins, so that is where most people trade in cars. However, some online services also allow trade-ins. You can also trade in a vehicle with an online-only used car site like Carvana, which you can check out our full review here.
Where Can I Find the Trade-in Value for My Car?
Before trading in your vehicle, you should get a car appraisal. There are several online sites for car appraisals that will show you the trade-in value, private sale value, etc., of your vehicle. Some of the top sites to use include Black Book, Edmunds, and Kelley Blue Book.
While all three sites can be helpful resources, Edmunds has an excellent reputation for accuracy and reliability. Make sure to enter as accurate of information as possible to get the best estimation.
Where Is the Best Place to Trade-In My Car?
Most dealerships consider trade-ins. Now, some online-only dealers, like Carvana, also accept trade-ins. To find the best place to trade in your vehicle, you should collect quotes from several dealers.
How Do I Get the Best Price on My Trade-In?
To get the best price on a trade-in, you should first research the appraisal for your vehicle. This will give you a good idea of what you can get. Research vehicles that you are interested in buying. Then, gather quotes from several dealers.
Only bring up the trade-in once you’ve settled on the price for the new vehicle. Then, use the information from the quotes you gathered to negotiate the trade-in value. Be ready to walk away if you cannot get the trade-in value you are looking for.
Car Models That Have a High Trade-In Value
The vehicle market is ever-evolving and based largely on demand. However, here are some key trends in trade-in value:
- SUVs retain their value well, especially compared to sedans
- Two of the best vehicles that hold residual value are the Toyota Tacoma and Toyota Tundra
- Specialized vehicles perform well with trade-in (Porsche sports cars, Jeep off-roaders)
- Consistently popular vehicles also perform well (Toyota RAV4, Honda CR-V)
Frequently Asked Questions
When is the best time to trade in a car?
Vehicles tend to hold their value better in the first half of the year. Ideally, look to trade in your vehicle in the first two quarters of the year.
What should you do before trading in your car?
Before trading in your car, you should research the trade-in value of your vehicle. Then, research some potential vehicles that you are interested in purchasing with your trade-in. After that, you should obtain quotes from several dealers for your vehicle.
Does a trade-in count as a down payment?
Yes, you can use your vehicle trade-in credit as a down payment for a new vehicle from the dealer. If you are planning on putting your trade-in toward your down payment, make sure to clarify this with the dealer to ensure that the paperwork is all done correctly.
Do you get more for trading in or selling?
You will often be able to get more money for selling your vehicle than trading it in. However, selling your vehicle takes much more time and effort on your end. Trading in a vehicle is less time-consuming and can still help you save money on your new vehicle purchase.
What do dealers look for in a trade-in?
Ultimately, dealers look for trade-ins that they can sell. This means they look for vehicles in good condition and one that will add variety to their lot. They also consider the current market demand, accident history, and add-ons/features.
Can you negotiate trade-in value?
Yes, you can and should negotiate the trade-in value of your vehicle. However, make the trade-in value a separate negotiation from the new car purchase. Only bring up a trade-in after you have agreed on a purchase price for the vehicle.