How To Trade In A Car: Pros And Cons, How It Works

Do you want to get rid of your current vehicle? You have several options: You can place a “for sale” sign in the vehicle window and wait for an interested passer-by to see it. You can list the car in the car classifieds or on Craigslist and receive calls and emails from potential buyers who might haggle the price. Or you can just trade in your car at a dealership and buy a new one.

Trade-ins are pretty common – the process is quick and perhaps the easiest way to get rid of your used car. However, some people avoid exchanges altogether, preferring to screen potential buyers themselves rather than negotiate with a reseller. However, sales for private parties are not as straightforward as they seem. Before you dismiss the idea of ​​a trade, find out what you can gain by going this route and reconsider the potential risks.

Benefits of trading in a car

When deciding on the best way to dispose of a car, several factors should be taken into account. Before you try to sell the car yourself, understand how a trade-in can help.

1. Simply deal with the dealer
If you trade in your car, the dealership handles the entire transaction from start to finish. All you have to do is show up, negotiate the deal, and you’ll be one step closer to buying a new car. While there are certainly benefits to selling a car yourself, trading it in is the best option if you just don’t have the time or desire to market your vehicle.

2. It’s fast and convenient
Private sales take time and effort – there is the work of marketing the car, meeting potential buyers, and transferring ownership. It can take several weeks or even months to find a buyer. On the other hand, when you change cars, you can get rid of your old car in a day or two.

3. Lower the price of your new car
If you own your car, the dealership will apply your trade-in amount to your new vehicle. For example, if you buy a car for $ 25,000 and the dealership gives you $ 6,000 to trade it in, you only need a loan of $ 19,000. And because the dealership has cut the final price of your car by several thousand dollars, you pay less sales tax.

Disadvantages of exchanging a car

Changing your car is not always the best option. Consider the negatives before making a decision.

1. You can get less money for your car
There is no doubt that swapping a car for a new one is simple and convenient. But too often, the amount offered by the dealers is much less than the value of the private part.

For example, the value of a private party for a 2009 Toyota Camry XLE in excellent condition with 30,000 miles is approximately $ 19,479. However, the trade-in value for the same car in the same condition is only $ 17,426, a difference of about $ 2,000.

2. Limit where you can buy a car
When a dealership evaluates your car and agrees to buy it, you are obligated to buy your next car from that dealership. If the dealership doesn’t have a car you want, you can’t trade it in. There is no provision that allows you to trade in a vehicle at one dealership and purchase it from another, or later.

How to change a car

If you decide changing your car is your best option, it’s important that you learn how to get the most out of the deal.

1. Know the value of your car
Distributors always want to pay as little as possible. For this reason, some try to belittle the consumer with a price lower than the equity in the exchange.

If you don’t know how much your car is worth, you will likely take any offer. So do your own research before setting foot on the dealer’s ground. Go to the Kelley Blue Book online and enter the make, model, year, mileage and condition of your car to find out the trade-in value. Print a copy of this information and take it to the dealer.

2. Repair the car
Any cosmetic damage to your car can reduce your equity and result in low trade-in value. You don’t have to give your car a brand new paint job, but it doesn’t hurt to clean the interior or exterior a bit before speaking to a dealership. Shampoo carpets, wash the car, buy touch-up paint to hide minor scratches, and fix dents. Simple repairs can add significant value to your car and increase your trade-in offer.

3. Compare prices
Shopping does more than get the best interest rate on your car loan or the lowest price on your new car; it also helps you get the most out of your trade. Visit multiple dealerships and request a quote to find out the value of your trade-in. Keep copies of your quotes and use this information as a bargaining chip.

Other considerations

Depending on the dealership, you can get more money for your trade-in if you buy a more expensive car, rather than a cheaper model. Also consider buying a new car towards the end of the year. This is when dealerships receive New Year’s inventory and are usually eager to unload models from last year. If you buy a model from the previous year, dealers are likely to offer more for your trade-in to encourage a sale.

Last word

At the end of the day, the dealers want your business and they have to sell cars. For this reason, they are generally willing to accept your transaction and negotiate a fair price. Of course, some dealers will try to hurt you, so do your research and familiarize yourself with the process, and you are sure to get the most money for your car.

Do you think the advantages of trading in a car outweigh the disadvantages? What other exchange tips can you suggest?

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