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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 aim is to assist you make better financial choices by providing you with interactive financial calculators and tools that provide original and honest content. This allows users to conduct research and compare data for free and help you make informed financial decisions. Bankrate has agreements with issuers, including but not restricted to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make money The products that appear on this website are provided by companies that compensate us. This compensation may impact how and where products are displayed on this site, including the order in which they be displayed within the listing categories and other categories, unless prohibited by law. Our mortgage, home equity and other products for home loans. This compensation, however, does not influence the information we provide, or the reviews appear on this website. We do not cover the universe of companies or financial deals that could be open to you.
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6 min read Published on October 11, 2022.
Authored by David McMillin by Contributing writer
David McMillin is a contributing writer for Bankrate and covers topics such as mortgages, credit cards and credit cards, banking, taxes and travel. David's aim is to help readers understand how to save money and also stress less.
Editor: Rhys Subitch Edited by Auto loans editor
Rhys has been writing and editing for Bankrate since the end of 2021. They are passionate about helping readers gain the confidence to control their finances by providing concise, well-researched and well-structured facts that break down otherwise complicated topics into bite-sized pieces.
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The trade-in of your car takes away the burden of selling a vehicle. The main perk of trading in a car, however, is the ability to apply the trade-in value of your old vehicle directly to a new purchase. This is particularly beneficial for those who are . These steps will help you make the most of your vehicle trade-in. 5 steps to trade in your car Doing your research and understanding how to navigate the trade-in process can allow you to maximize the amount that your trade-in gains. 1. Find out what you can get for your automobile.. first step in selling your car is to know the exact value . Finding this information yourself will allow you to feel more confident when it's time to negotiate, and will also increase your likelihood of getting the best deal. Rather than being patiently waiting to learn what the dealer's opinion is about your car, conduct some research to get a sense of your current vehicle's worth. Online appraisal tools that are free such as Kelley Blue Book or Edmunds, can help you determine the value of your car. If you have them, try using estimator tools that will give you more information about the dollars your car will be worth based on the car's attributes that go beyond model, make and year, as well as mileage. Value can also be affected by external factors. If gas prices are at a high level, like they are right now and they are, a car with better gas mileage might be more in demand as opposed to a truck that is too big. 2. Examine your financial situation. Trading in a car involves more than just looking at the vehicle. It is also necessary to assess the financial condition of your account in the event of the deal. If you're already in the process, you must determine the value of your trade-in is sufficient to pay off the rest portion of your loan. You can accomplish this by contact your lender to inquire about the amount to pay off the loan and then comparing it to your car's trade-in value. Contact several dealers to request quotes for trade-ins and get a firm idea of how much dealers will be willing to give. Keep in mind that if a dealership offers to pay your loan off on your behalf then you'll likely be able to include the amount of the payment to the new loan to purchase your next car. 3. Ask for offers from multiple dealers. You do not need to go to the dealer to begin the trade-in process. In fact, it is possible to request dealers contact you for a price. Numerous value estimators on the internet like Kelley Blue Book and TrueCar have connections to dealers that will extend offers based on the information you give about your car. It is also a good idea to start where you bought your vehicle. "If the customer is able to go to the same dealership from which he or she purchased the car, he or might be able negotiate a better deal since they have a connection and history with the dealership," says Meghan Davlin director of member engagement and communications for the Illinois Fuel and Retail Association. 4. Freshen up your car A cleaner vehicle is more likely to sell. Spend the time to clean both the outside and inside of the vehicle so that you are showing your vehicle in the best condition to make it easier for buyers "Make sure your car is spotless and you're showing it as you would want to get it buying the vehicle," says Alain Nana-Sinkam the senior vice president for business development with TrueCar. "Also should you find small flaws you had planned to fix prior to the trade, make sure to complete them so that your car arrives at the dealer as you had stated and in the manner they're expecting it." If you maintain your vehicle well, the vehicle is likely to fetch a more favorable price. Make sure you don't spend more money to repair the vehicle than what you plan to sell it for. Make sure you have all maintenance records in hand. It's also a good moment to look for recall notices for your car. If there is a problem with any components that caused a recall there could be the risk of injury. The majority of recalls result in repairs or the replacement of the vehicle component for no cost to the consumer. 5. Schedule an appointment with a dealer . Car dealerships are often busy. Schedule an appointment well in advance to save yourself time. The appraiser will review the car to confirm that all the information you have provided online is correct. "Ask whether you're able to be with the appraiser to ask questions about what they're using to determine how much they value your vehicle," says Joe McCloskey, director of McCloskey Motors which is located in Colorado Springs, Colorado. "Most dealerships will share this information with you, and knowing this information can help you to better understand what the dealer is doing and how it determines the value of your car." Be sure to 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 still has a loan and you're not sure of the lender's information ready to be handed over. Don't forget that you don't have to take the initial trade-in amount that a dealer recommends. You can negotiate your car's trade-in price. Dealers typically start by offering the lowest price possible. Let the dealer know that the offer seems too low according to offers from other dealers or on the value you've discovered during your study. Negotiating the trade-in price separately in relation to the cost of your next car also helps ensure that you receive the best trade-in value possible. What is the right time to sell your car The key to being able to determine if it's an appropriate time to sell your car is to know your vehicle's equity. The equity of your car represents the gap between the amount you owe on the vehicle and the current value of the vehicle. It is best not to trade within your vehicle when you are , which is the same as having . That means that you are liable for more on the car loan than the vehicle worth at present. This is a difficult circumstance to find yourself in since you'll have to pay the remaining loan amount after you trade in your car. If you can, hold off and keep making payments until you're not in debt. If you are forced to sell your vehicle with negative equity, you should consider purchasing an inexpensive vehicle to minimize the losses. Possessing equity that is positive on the other hand is a great position to be in because it allows you to take the additional value from the vehicle and apply it towards the cost of purchase of the new vehicle. Pros and cons of trading a vehicle in Before you trade your vehicle in, be sure that you know the advantages and drawbacks of selling the car yourself. The advantages of trading in your car The biggest benefit of selling your car that it can save you from the stress and headache of selling it by yourself. This requires determining the appropriate price, placing the car for sale where people will be able to see it, and dealing with prospective buyers. When you trade in your car to a dealer, they do a lot of the work for the buyer. "In the majority of states, there's also the tax benefit of purchasing and trading in your vehicle through a dealer," Nana-Sinkam explains, "because in those states, they only charge tax on the difference between the trade-in price and the price of the new vehicle instead of having to pay full tax on the entire purchase price of a new vehicle." In addition the process of trading in your car could make it easier to follow the steps of selling your old vehicle and purchasing a new one. Rather than going to multiple locations, you can simply take your car to the dealership and use the trade-in value to earn equity toward your new car. Pros and cons of trading your car There's a significant disadvantage to trading in your car, however: You're likely to not earn as much like you would if had the vehicle sold yourself. The dealership is trying to make money by reselling your used car to another driver, so you'll miss this extra sum of money. The sale of your car may be a disadvantage when it comes to buying the next car. If you're looking to use what you have earned from your current vehicle as the down payment on a new one then you might want to purchase your next car from a dealer willing to purchase the previous one. Following steps: Trading in your old car instead than selling it yourself will make it easier to get to a new car. To maximize the amount you make, begin by researching the worth of your car with free online estimators for cars. Before visiting an auto dealer, make sure you have your car cleaned both inside and out, and then make cost-effective minor repairs. It's recommended to solicit offers from several dealers and remember that you are able to negotiate the cost of trade-in.
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Written by a contributing writer
David McMillin is a contributing writer for Bankrate and covers topics like mortgages, credit cards and credit cards banks, taxation, and travel. David's aim is to help readers discover ways to save money and worry less.
Editor: Rhys Subitch Edited by Auto loans editor
Rhys has been editing and writing for Bankrate since late 2021. They are committed to helping readers gain the confidence to manage their finances with concise, well-researched, and clear data that chops otherwise complex subjects into digestible pieces.
Auto loans editor
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