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How to trade in your car: 5 simple steps to take Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to help you make smarter financial decisions by offering interactive financial calculators and tools that provide original and honest content. This allows you to conduct your own research and compare information at no cost to help you make informed financial decisions. Bankrate has partnerships with issuers, including but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make money The products that appear on this site are from companies that compensate us. This compensation may impact how and when products are featured on the site, such as the sequence in which they be listed within the categories of listing, except where prohibited by law. Our mortgage home equity, mortgage and other home lending products. This compensation, however, does have no impact on the information we provide, or the reviews that you read on this site. We do not include the vast array of companies or financial offerings that could be available to you.
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6 minutes read. Published October 11, 2022
Written by David McMillin Written by Contributing writer
David McMillin is a contributing writer for Bankrate and writes about topics such as mortgages, credit cards banks, taxation, and travel. David’s aim is to help readers understand how to save more and stress less.
Edited by Rhys Subitch Edited by Auto loans editor
Rhys has been writing and editing for Bankrate since late 2021. They are dedicated to helping readers gain the confidence to take control of their finances through providing precise, well-studied information that breaks down complicated subjects into digestible pieces.
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Car trading eliminates the burden of selling your vehicle. The most significant benefit of trading in a car is the ability to apply the trade-in value of the vehicle you have traded in directly to a new one. This is especially advantageous if you’re . These steps will allow you to maximize the value of the vehicle exchange. 5 steps to trade in your vehicle. Doing your homework and knowing how to navigate the trade-in process can allow you to maximize the amount your trade-in earns. 1. Find out what you can get for your automobile. The first step to trading in your car is to figure out exactly . Figuring this number out yourself can help you feel empowered when it comes time to negotiate and can help increase the likelihood of getting the best deal. Rather than waiting to find out what the dealer thinks about your car, conduct some research to find out your current car’s value. Tools for appraisals online like Kelley Blue Book or Edmunds, can help you determine the value of your car. If available, use estimator software that gives you a deeper sense of the value your car will be worth based on the car’s attributes that go beyond model, make and year, as well as mileage. The value of your car could also be affected by external factors. If prices for gas are at a high level, like they are and they are, a car with higher gas mileage may be more sought-after as opposed to a truck that is too big. 2. Take a look at your finances . Trading in a car requires more than just assessing the car. It is also necessary to assess the financial condition of your account to on the other side of the transaction. If you’re already in the process, you must determine the trade-in value of your car will be enough to cover the remainder part of the loan. You can accomplish this by contacting your lender to determine the loan’s payoff amount and then comparing it to the value of your car’s trade-in. Contact several dealers to request quotes for trade-ins and get an accurate idea of many dealers are willing to offer. Be aware that if a dealer is willing to pay your loan off on your behalf, you will likely include the amount of the payment to a new loan for your next vehicle. 3. Ask for offers from multiple dealers You don’t have go to the dealer in order to begin the trade-in process. In fact, it is possible to have dealers contact you for the price. Many online value estimators, such as Kelley Blue Book and TrueCar have connections to dealers who extend offers based on the information you provide about your vehicle. It’s also possible to start with the place you purchased your vehicle. « If the consumer is able to visit the same dealer where they purchased the car, he or she may be able to negotiate a better deal since they have a relationship and history with the company, » says Meghan Davlin director of member engagement and communications of the Illinois Fuel and Retail Association. 4. Get your car clean better-looking car will be more likely to sell. Spend the time to clean both the interior and exterior of your vehicle so that you are showing the car in its best state to make it easier for buyers « Make sure your car is in good condition and that you present it as you would want to get it purchasing the vehicle, » says Alain Nana-Sinkam, senior vice president of business development at TrueCar. « Also, if there were tiny flaws you intended to address prior to the transaction, ensure that you get them done so the car is delivered to the dealer exactly as you reported and as they are expecting it. » If you maintain your vehicle well, the car will fetch a higher value. Make sure you don’t spend more money for repairs than you anticipate selling it for. Make sure you have all service documents in your possession. It is also a good time to review any recall alerts for your vehicle. If you find any defective components that caused an recall there could be an increase in safety risks. The majority of recalls result in repair or replacement of a vehicle part without cost to the customer. 5. Schedule an appointment with a dealer Car dealerships can be busy places. Set up an appointment ahead of time to cut down on time. The appraiser will inspect your vehicle to ensure that the information you submitted online is correct. « Ask if you can attend the appraisal to ask questions about the process they use to determine what value they will assign to your vehicle, » says Joe McCloskey the vice president at McCloskey Motors located in Colorado Springs, Colorado. « Most dealerships will provide the information they have with you and knowing this information can aid you in understanding what the dealer is doing and how it is valuing your vehicle’s value. » Make sure you bring the vehicle registration as well as the title, along with all sets of keys. If you do not have the title due to you’re selling a vehicle that is still under loan, have the lender’s information ready to be handed over. Remember, you don’t have to accept the initial amount of trade-in that a dealer recommends. You may negotiate your vehicle’s trade-in value. Dealers typically begin by offering the cheapest price they can. Tell the dealer the price seems too low based on offers from other dealers or on the value you’ve discovered during your study. Negotiating the price of the trade-in separately in relation to the cost of your next car also helps to ensure you get the highest value you can for your trade-in. What is the right time to sell your vehicle The most important factor in being able to determine if it’s an appropriate time to trade in your car is to know your vehicle’s equity. The equity of your car represents the gap between the amount you still owe on the car and the current value of the vehicle. It’s best not to trade within your vehicle in the event that you’re not in the same situation as having . This means you owe more on your vehicle loan than the vehicle currently worth. This is a difficult circumstance to find yourself in since you’ll still need to pay for the remaining loan balance after trading in your vehicle. If you are able, keep making payments until you’re no longer under water. If you have to sell your vehicle with negative equity, think about buying an inexpensive vehicle to minimize the loss. Having positive equity, in contrast, is a good spot to be in because it lets you take the additional value from your vehicle and use it to finance the purchase of the new car. Pros and negatives of trading a car in Before you trade your car in, make sure you are aware of the advantages and drawbacks of selling the vehicle yourself. Benefits of trading in a car The most significant advantage to trading in your car is that it will free you from the stress and headache of selling the vehicle on your own. It requires you to determine the best price, placing the car for sale where people will view it, and negotiating with prospective buyers. But when you trade it in, the dealer does much of the work for the buyer. « In the majority of states, there’s a tax advantage to purchasing and trading in your vehicle at a dealership, » Nana-Sinkam explains, « because in those states, they only charge tax for the amount that is the sum of the trade-in price and the price of the new vehicle instead of imposing a tax on the full purchase price of a brand new vehicle. » In addition the process of trading in your car could make it easier to follow the steps of selling your old car and purchasing a new one. Instead of visiting multiple locations, you could simply bring your old vehicle to the dealer and use the trade-in value as equity toward your new car. Pros and cons of trading your car There is one significant disadvantage to trading your car but you won’t earn as much as you would if you sold the vehicle yourself. The dealership is trying to make a profit by selling your car to another motorist which means you’ll be missing that extra chunk of money. The sale of your car may be a disadvantage in the purchase of the next car. If you’re planning to use what you have earned from your old vehicle as the down payment for a brand new one then you might want to purchase your next car from a dealer willing to buy your old one. Next steps Trading in your old car instead than selling it yourself will streamline the process of getting into a new vehicle. To maximize the amount you make, begin by researching the worth of your vehicle with no-cost car estimation tools online. Before heading to the dealer, you should clean your car both inside and out, and then do minor repairs that are cost-effective. It’s also a good idea to solicit offers from several dealers, and keep in mind that you can negotiate the cost of trade-in.
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Written by a contributing writer
David McMillin is a contributing writer for Bankrate and writes about topics such mortgages, credit cards, banking, taxes and travel. David’s goal is to help readers understand how to save money and worry less.
Edited by Rhys Subitch Edited by Auto loans editor
Rhys has been writing and editing for Bankrate since late 2021. They are passionate about helping readers gain confidence to control their finances by providing precise, well-researched and well-sourced data that chops otherwise complicated topics into bite-sized pieces.
Auto loans editor
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