Auto Loans

Tips on How to Trade In Your Car

Looking to trade in your car? There are a few concepts you should know before walking into a dealership. The more informed you are about your car and the process of trading in your car, the more confident you can be. Generally speaking, unless you’ve traded in several vehicles, the dealership is going to have more experience and will be looking to get an upper hand on the car trade. Fortunately, we have some tips that can help you level the playing field.

One of the first things you’ll need to know is that trading in your car, in most cases, will not give you the highest amount in value. If your goal is to make as much money as possible from the deal, your best option may be selling it on your own. This is because you are unlikely to get the full resale value from the dealership. Knowing this should help form your expectations.

Below, we will explore the trading process and provide the best ways to maximize your trade-in:

How does trading in a car work?
4 tips for a successful trade-in
Pros & cons of trading in your car
Trade-in mistakes to avoid

How does trading in a car work?

The basic trade-in process is fairly simple. Most trade-ins begin with a general inspection of the car’s condition. Dealers will commonly check the car’s mileage, fluid levels, conduct a visual inspection for any cracks, chips and dents and they will look at the vehicle’s records using the VIN (Vehicle Identification Number). The VIN is the 17-digit code that provides details on the car’s make, model and where it was manufactured.

When the inspection is completed you will receive an offer. The value of that offer will mainly depend on the condition of the car but it can also be affected by repairs that the dealer may need to make on your car and similar cars to yours on the lot. When the offer is made, you can choose to accept it, negotiate for more or decline and go elsewhere.

There are a few situations that can complicate a trade-in; one of those is trading in a car that you have not paid off. Dealers, however, are used to this process as it is a fairly common occurrence.

The car dealer will work to contact your lender and process all of the tedious work of transferring the title and ownership. As an example, let’s say you own a car the dealer says is worth $20,000 but you owe $12,000 on it. In a situation like this, the dealer would pay off the loan and give you a trade-in credit of $8,000 toward a new car purchase.

If you owe more than the car is worth, you may find that the dealership has rolled this cost into your new car payment. It could look something like this: If you owe $10,000 on a car that is only worth $5,000, the dealer would simply add that $5,000 to the cost of the new car.

Be careful in these situations. You may feel good about trading in an underwater car to get a new car, but you’re walking out with a loan that is almost certainly more expensive than the value of the car you purchased. It may feel like you’ve gotten rid of the problem by trading in your old car, but so long as you owe on an auto loan more than your car is worth, you’re still considered underwater and could be making yourself financially vulnerable.

4 tips for a successful trade-in

1. Appraise your car’s trade-in value

Before going to the dealership, you will need to know the value of your current car. One of the best ways of doing this is through Kelley Blue Book. Here you will be able to enter your car’s information such as the make, model, mileage and condition. Kelley will then provide you with a range you can expect to receive from a dealer and a range of what you can expect to sell it for on your own. “When you’re trading in a car, the dealership that they trade to will not be offering any more than the rough to average wholesale price for their vehicle,” said Steve Lang a longtime auto auctioneer and car dealer out of Atlanta who has co-developed the Long-Term Quality Index.

2. Shop around to get the most for your trade-in

Not every dealer is going to offer you the same price. This could depend on a number of factors including the dealer’s inventory, the car’s condition and how likely they feel the car will sell. Edmunds suggests taking your car to a dealer that does not sell your car’s brand. An example would be taking your Ford to a Nissan dealer. They state that this way you won’t have to compete against several other cars that are just like it. In fact, a non-Ford dealer may offer you more than a Ford dealer will.  “Also, if the car you are driving was a popular rental, lease or fleet model, they also transact at lower prices,” said Matt DeLorenzo, managing editor for Kelley Blue Book. He added that this is because you are “competing against those depressed prices with your privately owned vehicle.”

3. Be sure you have all necessary documents

The first thing you’ll need is the car’s title. This proves that you legally own the car and that you are authorized to transfer ownership. If you’re still paying off the car, bringing your loan documents may help with the process as well. Lastly, you’ll want to include all the documents that came with the car and any maintenance records that you may have.

4. Negotiate

“Come into the dealership with a good idea of what your vehicle is worth and what you’d be willing to settle for,” said DeLorenzo. He emphasized that you will not get as much through the dealership as you would on your own, but you will need to find out if the difference in cash is worth the time and hassle of listing the vehicle on your own and trying to convince individual buyers to take a deal.

Pros & cons of trading in your car


  • Simplicity and speed. Once you have settled on a deal, the dealership will take care of the entire process for you. Compared with selling the car on your own, you could be saving yourself weeks trying to find buyers.
  • Repair issues. If your car has serious issues with the engine or transmission, you may get a better price with a dealer than selling it on your own.
  • You could save money on new car. If your car is paid off, the dealer may give you a credit toward a new car. That trade-in value may help you pay less in interest if you’re taking on a new loan and less in sales tax due to the lower price tag.


  • Limits options. Once you trade in your car, you are limited to one dealer and their inventory, and you are no longer able to shop around and compare prices at other places.
  • Less money. If your goal is to get as much money as possible, you’re usually better off selling the car on your own despite the inconveniences.
  • No guarantees. Once your car is traded, the dealership can legally sell your car even if the deal for your new car doesn’t pan out because of credit or some other financial issue.

Trade-in mistakes to avoid

Overestimating your car’s worth is one of the biggest mistakes you can make in a trade-in. Remember that to you, your car may have a lot of sentimental value, but to the dealer, it doesn’t amount to much. As mentioned earlier, it is unlikely that you will get the full resale value from a dealership. You’ll want to get a good understanding of what they may offer you and what you’re willing to settle for.

Coming to the dealer with a filthy car is another rookie movie. Car experts also stress cleaning your car. “My advice is detail, detail, detail,” DeLorenzo said. “Get your car cleaned from top to bottom.” This signals to the dealership that the car has been cared for and could get you a higher trade-in quote.

Spending money to repair your car prior to a trade-in can be a mistake as well. Many consumers feel making last-minute tune-ups or adding new tires will substantially improve the trade offer. Edmunds warns, “This seldom works.” Dealers usually have the access to make repairs at a much lower cost than if you were to do them on your own.

Lastly, not making an attempt to negotiate and compare could result in leaving money on the table. The key to starting the negotiation is having a solid idea of what the car is worth. If you are not offered something within that range, take your offer and compare it with another dealership. If you are not able to negotiate a higher trade-in offer, try for additional benefits like oil changes and other regular maintenance perks.


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