How To Trade in Your Car

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When it comes time to purchase a new vehicle, one of the most difficult parts of the process is often figuring out what to do with your old one. Most car owners dread the thought of going through the process of selling their old vehicle, but there is an easier option, trading your old car to the dealer.

By trading in your car, when you purchase a new car, the estimated value of your old vehicle is deducted from the price of purchasing your new car, eliminating most of the work of selling your vehicle. When it comes to trading in your old vehicle, every dollar counts, and though the process can be relatively easy, it is important to know what you are doing to ensure that you get the best value for your trade-in. Here are easy-to-follow steps to trade in your car.

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5 Steps To Trading in Your Car

Taking some time to understand how to trade in your vehicle can go a long way to maximizing your trade-in value, saving you money on your new vehicle. Here are four steps to ensuring you get the best deal.

Step 1. Find Out Your Car's Value

Before entering a dealership, it is important to do some research to find out what your old car is worth. There are a number of online calculators which use information from the National Automobile Association to give you an estimate of the value of your vehicle based on its age, make, model, mileage, and condition.

This number will give you a baseline to use when negotiating the value of your trade-in. Keep in mind that these tools will give you an average value, but the visible condition of your car, as well as external factors such as current demand, will play a major role in the final result. Still, this estimate will play a crucial role when negotiating, so don't skip this step.

Step 2. Determine Your Vehicle Equity

It is possible to trade in your old vehicle even if you still have an outstanding loan balance on it. In this case, the dealer will repay the balance of the loan when you trade in the vehicle. However, how this affects your trade-in depends on the value of your car and the remaining balance of your loan. This can take the form of one of two scenarios:

• Positive Equity: If your vehicle is worth more than the remaining balance you owe the lender, it means that you have positive equity, which can reduce the cost of purchasing your new vehicle from the dealer.

• Negative Equity: If the value of your vehicle is less than the amount you owe, it means that you have negative equity. You will still have to cover this negative equity which you can pay for separately through cash or a loan, or you can roll it into the amount of a new car loan.

Regardless of whether you have positive or negative equity, trade-in is still possible, but it is important to consider this in making a decision. This could have a major effect on the final value of your trade-in.

Step 3. Prepare for Car and Paperwork

When it comes time for a dealer to examine your car and judge its value, you definitely want it to look its best. So, start off by giving your vehicle a good thorough cleaning inside and out to get it looking spotless. Next, make sure everything is in its place, headrests in their slots, cup holders, and ashtrays mounted. Just make sure everything is looking its best for when a dealer examines it.

You will also need to prepare some paperwork for your trade-in, including your vehicle's title and registration. If you have an outstanding loan for the vehicle, you will need any payoff and account information as well. Remember to bring your driver's license and car keys as well.

Step 4. Seek Quotes From Multiple Dealers

Just as when purchasing a car, it is important to shop around to determine the best value before trading in your car. Call or email several dealerships and tell them you are interested in purchasing a car but want a fair price on a trade-in. They may provide you with a quote based on your description of the vehicle, but keep in mind that few dealers will provide a firm offer before seeing the vehicle in person.

Step 5. Choose the Best Offer

Now it is time to choose the best offer and before accepting any deals, make sure that both the value of your old vehicle and the purchase price for the new one are in line with your research. Remember to keep in mind that your trade-in is simply reducing the price of purchasing your new vehicle, so look for the lowest absolute price, not just the biggest deduction.

Advantages of Trading in Your Vehicle

The biggest advantage of trading in your vehicle is the ease it offers over selling it on your own. Selling a car means setting a price, finding a way to post it for sale where potential buyers will see it, and meeting with potential buyers. A trade-in leaves all of this heavy lifting to the dealer.

Plus, by trading your old car in with a dealer, you can get all of your buying and selling done at the same place. This kills two birds with one stone and saves you a lot of time over-selling your car somewhere else.

Disadvantages of Trading in Your Vehicle

The major downside of trading in your car is the fact that you probably will not make as much as you could by selling your car on your own. The car dealership you trade your vehicle in with needs to make a profit by selling it themselves, which means you will miss out on that money.

Trading in your vehicle also may mean limiting your options to a dealership that is willing to accept a trade-in. Fortunately, there are generally a large number of dealerships that are willing to accept a trade-in.

Final Thoughts

Trading in your vehicle can be an excellent way to simplify the process of getting into a new car. By following these steps, including researching a fair value, preparing your vehicle, and acquiring multiple quotes, you can help guarantee you are achieving the best possible value on your trade-in as you get ready for your new set of wheels.