Are you thinking of selling your car or you are interested more in a trade in option? Whichever the case, below you can find some tips and tricks on how to proceed with a trade-in and what are the benefits and disadvantages of one compared to a private sale.
For some reason, I have always preferred a private sale, not entirely sure why. It could be the fact that normally you can get a better financial result or maybe the fact that you are in control of the situation – what you ask for is what they have to give you, if they want the car. When it comes to trading in your vehicle, you have to spend hours in different dealerships, negotiating the price that suits you both; in this case you depend on their appraisal (more or less), especially if you haven’t done your homework right.
So what exactly is a trade-in?
In a trade in, you simply use your current vehicle as a form of down payment in order to purchase a car that you are interested in. As in any other down payment the bigger it is, the less you’ll have to pay off in the long run. Also, let’s not forget your credit score, just as with everything else – the better it is, the better off you are!
Here are our suggestions on how to get a good price for your vehicle and in general the most out of your trade in:
Make sure you increase the value of your vehicle as much as possible (or at least make it look as if it costs more).
How to do it? – Clean your car, yes you heard me, it’s about time and no the empty, almost dissolved McDonald’s packaging, does not come with the car.
- If you feel like spending some extra bucks, you can easily have it detailed.
- If not – a good carwash clean up (even your backyard with the hose will do!) – make sure you wash the exterior, vacuum the interior, clean the engine, tires and trunk; and of course, polishing it up won’t kill you. Bottom line is – make it presentable.
There are a few things that the dealer will check when you take the car in for an appraisal:
- Interior and exterior
- Condition of the tires
- Does it have a hub cap?
- Check engine light
- The engine itself
Not sure how to maintain and clean your car, check out our guide, it will help.
- You really want to get quotes from at least three different dealerships, in order to make sure they are not undervaluing the real price of your car. If you have a CarMax near you you can go and ask them for a free appraisal of your car. They give you an offer and a written report of the appraisal, so that you can take it with you to the other dealerships and if they offer you a lower price, you can always take the CarMax report out and negotiate with them.
- Another advantage of checking out different dealerships is that they might have different incentives for trade in, such as rebates, cashbacks that they apply to the trade value, in some states you can even keep the tires from your old car.
- If you are still paying your car off, but you want to trade it in you can still do so. If the car’s current value is more than what you owe for the car, the unused portion goes as a down payment; if the current value of the car is lower than what you owe for the loan, the negative equity goes into the new vehicle that you’re getting.
- Check out your vehicle’s current market value. You can go to kbb.com and look up your car’s value either for selling it yourself or for a trade in. If you want to take a look at the price of the car you are buying, you can visit www.nadaguides.com and search for your car of choice.
- In some states, you can get tax credit when you trade your car in.
- One of the biggest benefits that you get when you trade in your car is the tax advantages. For instance, if the new car costs $30 000 and your car is valued at $10 000, the taxable amount is the difference between the two, in this case – 20 000. So you not only get a new car, but you get to skip a big portion of the taxes on it.
- Last but not least – a dealership might try and get you to return to them by giving you a higher price (than the market value) of your car, but at the same time a higher price on the new car that you are buying. They could do this so that when you go to a different dealership and they give you a more realistic price for your car, you might think that they are undervaluing it and return to the previous dealer, but what you would not know is that the new car’s price is lower from what they are selling it to you; all in all make sure you know your car’s market value and the market value of the one you are buying!
So, to sum it up – should you sell your car or opt for a trade in?
Hmm, still a tough question to answer. You could definitely get more on your car by selling it yourself, but if you are a good negotiator, you know what you are talking about and you know your stats, i.e. market value of each car – you can easily sell your car at what it’s worth and get some of the pros of trading it in. Enough being said, if you are a car guy or gal you will know what to do. Now, are you?
Do you feel more confident that you can get a good vehicle trade in now? What else would you add to this little guide? Thanks!