How to Get the Most for Your Trade-in
Don't discuss your trade-in with a salesman until after you've agreed upon a great price for your new car. When you're ready to finalize the deal, the topic will be back on the table. The amount of your trade can have a big impact so its worth preparing in advance.
If a salesman asks you about your trade-in before you've agreed to a price, simply tell him:
"I haven't decided whether I'll be trading-in or not and would prefer not to discuss it until after we've settled on a price for my new car."
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Should You Trade in Your Vehicle?
Trading in your vehicle is not a decision that you should take lightly. That’s because you may be better off not trading in your vehicle depending on your specific situation. Here’s a look at the pros and the cons of trading in your vehicle.
Trading in Your Car Pros
- Quick. You can drive your vehicle into a dealership and get a trade-in offer that day. That means that you don’t have to deal with the long process of trying to sell your vehicle.
- Paperwork. Trading in your car means that you don’t have to deal with all the paperwork. This can save you lots of time and a big headache.
- Loan Pay Off. If you owe money on your vehicle, the dealer will take care of the loan.
- Sales Tax. When you trade in a vehicle, you may not have to pay the sale tax on the transaction.
Trading in Your Car Cons
- Not the Best Deal. You may be better off selling your vehicle if you want to get the most amount of money for your vehicle. If you have a highly sought-after model, then a private sale may make more sense.
- Confusing. A dealer will usually combine your trade-in offer with a lease or purchase offer along with the financing terms. It may be hard to discern how much you are getting for your trade-in.
- Underwater on Your Vehicle. If you owe more than what the vehicle is currently worth, then trading in your vehicle may not help you much. That’s because dealers will typically offer you less than what you get from a private sale.
How to Get the Most Money for Your Trade In
Step 1 - Get a Third Party Used Car Appraisal
Before you go to the dealership, figure out how much your trade-in is worth at home. This will tell you the minimum price you should be willing to accept when you negotiate.
To find out how much your trade is worth use Black Book, Edmunds, and Carvana.
This will give you an instant appraisal and lets you get email offers for your car from multiple dealers. Print these out and take them with you to the dealership.
Learn more about which used car buying guide is right for you: Black Book, Edmunds, or Kelley Blue Book
Step 2 - Negotiate your Trade-In at the Dealership
Once you arrive at the dealership, you'll be ready to negotiate you
r trade. Usually, this part of the negotiation cannot be done via email since the dealer will want to see your car. But not to worry, you do have some leverage.
Before they take your car keys, mention...
- Your purchase is contingent on getting an acceptable amount for your trade-in.
- You'll give a positive rating on the customer satisfaction survey (which is linked to salesman compensation)...if you get a satisfactory offer.
After they give you an initial trade-in offer...
- If the dealer has not beaten your estimate, show him your printed appraisal from the Edmunds. Tell him that if he cannot beat this deal you might need to go and sell your old car to the other dealer first and then come back. Usually, they will not want you to leave and may bump the price.
- Do a quick comparison against your outside appraisal. If the outside appraisal is higher, feel free to buy a car without trading-in. However...
Trade-in Sales Tax Calculation
Consider the Trade-in Tax Savings
Most states will credit the value of your trade-in when determining the purchase price for sales tax calculations. This can result in a significant discount off the total amount you’ll pay. These savings are not available if you sell your car to a third party.
To do a quick calculation at the dealership, use my free calculator to see whether it makes more sense to trade in your car or sell it privately:
--->"Trade-in or Sell Private Party" Calculator<---
Step 3 - Get the Highest Value for Your Trade
- Clean it! Make sure your car sparkles both inside and out. Remove any clutter or personal items, vacuum the interior, and try to air out any odors. Just like selling a home, spend a few minutes on the presentation if you want to attract a buyer.
- Fix Small Issues Do you have a knob missing from the controls? Is there a rip in one of the seats? Invest in small touch-ups that can get you a higher appraisal price. Other things car appraisers look for: scratches, dents, windshield cracks, tire damage, old floor mat, etc.
- Maintenance Records Consider bringing any documentation you have on regular maintenance, oil changes, or new purchases like tires, brakes, etc. that may help you establish a higher value for your car and mention these to the appraiser. But stay clear of bringing attention to any problems or issues they might have overlooked.
- Consider Market Conditions Consider the area of the country and time of year. Four wheel drive can be a hot commodity in the North, hybrid vehicles do better on the West Coast, and convertibles do better in warmer climates. Are gas prices up? If so SUV prices could be down.
- Be Realistic Just remember to be realistic with your expectations. Keep in mind that the price a dealer is willing to pay is related to how much they can get for the car. You will probably get more value selling a Jeep at a Jeep dealership because they can resell it on the lot. When dealers have to resell your car at an auction or wholesale, they usually cannot get as much for the car and therefore cannot pay you as much.
Alternatives to Trading in Your Car
Looking for alternatives to trading in your vehicle? Here are some other ways that you can convert your vehicle into cash.
- Private Sale. You can sell your vehicle yourself. This is the more time-consuming process. However, you may potentially get the most money for your vehicle. A private sale is recommended if you have a highly desirable vehicle.
- Online Auction. You can also sell your car via an online auction such as eBay Motors, Bring a Trailer, or Cars and Bids. You can sell your vehicle fast and may get competitive offers for your vehicle.
- Online Car Selling. Sites like Carmax, Carvana, and Vroom allow you to sell your vehicle fast. Check out our full comparison of each online platform.