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.”
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 the Black Book.
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.
Step 2 – Negotiate your Trade-In at the Dealership
Once you arrive at the dealership, you’ll be ready to negotiate your 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 Black Book. 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, remember the following formula:
trade in value times 6%* = tax savings
*Sales tax varies from state to state, so use your own state’s tax %, but 6% is the norm.
Make sure you add this tax savings to the dealer’s trade-in offer before comparing to your outside Black Book appraisal.
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.
- 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.