The time has come to buy a new car. The reason why doesn’t matter, but the how and where does. Looking at other cars while you still own your soon-to-be-old car, may feel like cheating, but the time will come to find it a new home as well.
And one of the popular options for selling your current car, is to trade it in. And while there are other selling options available, such as selling it privately, we feel the need to explore the whole “trade-in” option.
Terms to understand
Before we get to the good, the bad and the decision-making, it will be good to understand some of the terms that you can expect to hear when talking trade-ins.
- Trade-in price: This is the figure the car dealer will offer to buy your car from you. This amount is then deducted from your new car’s total cost should you choose to sell.
- Retail price: The retail price is, effectively, the offer you choose to sell or trade your car in for to get the most cash out of the deal.
- Blue book value: This is the value that car dealers base their trade-in prices on in line with the dealer valuation book by Transunion, which is used as the industry standard value for respective vehicles. This means that your car, in the eyes of any dealership, will have this maximum value that is then recalculated according to the state of your vehicle.
Reasons why you’d want to trade in your car
Let’s start with the good, shall we?
- Pure convenience: Everyone knows that there is less hassle in trading in your car than trying to sell it privately. It’s more of a sure-thing than placing an advertisement for your car online and waiting for serious buyers to contact you. Trade-ins are quick and easy to do, and the sooner you sell your old car, the sooner you can put a down payment on a new one and start financing your next vehicle.
- The price drops: When you trade-in your car, you’re getting an immediate down payment on your next car, which will drop the total cost of the car and require a smaller loan for financing, and ultimately, a shorter period of time before you’re car-debt free.
- A simple process: It’s just you and the car dealer – no third party involved. The car dealer handles everything and all you need to do, after the negotiations are out of the way, is sign and decide on the car you want to buy.
Reasons why you wouldn’t want to trade in your car
As with all things, there is “the ugly”. Reasons why trading in may not be the best for you:
- Less value: Yes, it’s a quick and easy process, but often times the dealer will offer you less than what your car could actually be worth if you were to sell privately.
- Limited options: There’s the issue of being limited to the car options available at that same dealership to choose and buy a new car from.
- Doesn’t qualify: You may also find that your car doesn’t qualify as a trade-in to some dealerships. This can relate to the condition your car is in or even just the fact that they already have enough car models, like your own, on the floor.
Considerations to take when trading in
If you do choose to go the trade-in route, you will need to prepare and keep a few things in mind to ensure you get the best trade-in price for your old car.
- Know what your car is worth: As depressing as the small value might be from what you were hoping for, your car does have a minimum value and you need to make sure you know what that value is, so that you aren’t completely ripped off by the dealer. If you know what your car is worth you can engage in an informed haggle-session to try and get the trade-in price up.
- Keep your car ship-shape: It’s not only about the blue book value. It’s also about the state your car is in when you bring it to the dealership. Chipped windshields, scratched paint and the condition of the seats will all be scrutinised and reasons why the trade-in offer is low. Keep your car in a good condition to keep the value high.
- Don’t buy into the first offer: If you have a bit of time and energy to spare in this practically effortless process, then do yourself a favour and take your car to different car dealerships and see what all the offers are. You don’t have to buy with the first offer you get.
- Let the dealer talk: A smart tactic to get an idea of where the dealer’s priorities lie, is to let them talk first and give you their offer before you answer their question of “What value were you hoping to get for your trade-in?”. This way, you are in control of the situation by seeing where their offer starts (not influenced by your, possibly lower, estimated value) and taking the knowledge of what you know your car is worth to see how high you can get the trade-in price.
At the end of the day, you know how desperate you are to get a new a car and how much patience you have to go through the process of getting the most out of your old one.