How to Handle a Trade-in

June 24, 2019

One of the concerns when buying a new car is what to do with your old one. The best answer to this question usually depends upon a few key factors.

  1. How much is the car worth?
  2. How much do you owe on the car?
  3. Are you willing to sell it yourself?

These considerations will help you decide whether to swap it for your new one with a dealer, find a new buyer on your own, or if you can do either of the above advantageously.

With those factors in mind, here’s how to handle a trade-in.

How Much Is the Car Worth?

The only way to really know if you’re looking at a good price is to know what it should bring. Before entertaining offers to buy your car, take a look at the two leading indicators of car value: and the NADA Guide. These are the guides dealers use to determine how much to offer for your car.

Take a look at the trade-in value and what you could expect to get in a private party sale. There will always be a disparity between the two, as dealers must resell the car at a profit after they buy it from you.

How Much Do You Owe on the Car?

If your loan balance is considerably less than the value of the car, you’re in very good shape. You’ll be able to sell or trade the car and pay off the loan with the proceeds from the transaction. This will put you in a much better position to finance your new car. It will make the negotiation process more favorable as well.

To see how much difference having equity in your car can make, subtract the loan amount from the value of your car and add the difference to the amount of cash you have on hand for your down payment. Plug the sum into a good car loan calculator— like the one offered by RoadLoans. You’ll see how having that additional cash will make your monthly payments lower on the new car.

On the other hand, if you owe more than the car is worth, you’re going to have to come up with the cash to pay the difference, plus a down payment for your new car.

Are You Willing to Sell It Yourself?

This is the best plan of attack if you want to maximize the value of your trade-in. You’ll get far more money selling the car to a private party than you will at a dealership. Remember, dealers buy to resell, this means they’ll offer you less than the car is actually worth.

However, if selling the car yourself feels like too much trouble and you can live with getting less for it, here’s your best strategy.

Getting the Best Price for Your Trade-in

Like any other buyer, dealers want to get the best product they can for the money they spend. When you decide to trade your car in, make every effort to demonstrate it’s worth buying.

Clean it up before you show it. Then take it to a number of dealers to get it appraised as a trade-in. Many will buy your car even if you don’t trade it in — particularly if they sell the brand.

With those quotes in hand, you can negotiate the price of your trade-in from a knowledgeable perspective. Other useful tools are a vehicle history report from CarFax and the maintenance records you’ve kept on the car. If your new car dealer won’t give you what you know it’s worth, you can always go back to the one with the highest offer.

Knowing the guide values and having some real-world appraisals will help you get the best price for your trade-in. Just keep saying no until you hear a realistic number. Keep your trade-in and purchase negotiations separate and make sure both prices line up with industry guidelines.

Knowing how to handle a trade-in will help you get your new car without taking out a loan for more than it will ever be worth.

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