When it comes to used cars, it’s still a seller’s market.
Low inventory means you might be able to get a good price on a car you’re tired of, but don’t rush into the dealership unprepared. Follow these steps to increase your trade-in value and negotiate the best price for your car.
1. Do your homework
It’s important to know the current trade-in value of your car, of course. You can use sources like Kelley Blue Book, True Car, and Edmunds to find out. But remember that this is just a baseline. You should also be honest about any repairs and the condition of your car. Unless your car is truly in like-new condition, you’re unlikely to get the current trade-in value.
Also, keep in mind that you’ll get a lower trade-in value than if you sold the car yourself. Many people think they’ll get top dollar, but the dealership taking your trade-in needs a profit margin and will likely offer you less than the trade-in value listed on these sites.
2. Addressing known mechanical issues
The mechanical and physical condition of your car plays a big role in how much it’s worth, so it’s best to fix any issues that are relatively easy to fix. Generally, even minor repairs that don’t cost you much out of pocket can increase your car’s resale value. This includes small cosmetic repairs like dents and scratches, or replacing burned out lights.
You’ll want to find out which repairs are the most cost-effective that can increase the resale value of your car. Repair buddy This will give you a rough idea of how much a particular repair will cost.
You should also check the National Highway Traffic Safety Administration’s database to see if there are any recalls that affect your vehicle. Recalled parts can be fixed free of charge, and the extra effort may increase your car’s resale value.
Keep all repair and maintenance receipts – they will show the dealer or potential buyer that you took good care of your vehicle.
3. Keep your car in tip-top condition
A well-maintained car is likely to fetch the highest trade-in value. This may sound obvious, but many people trade their car in without giving it a basic cleaning. Just like you would spruce up the exterior of your house, you should also meticulously care for your car. Appearance matters.
4. Check trade-in value
It’s important to shop around for potential trade-ins: Don’t go to the dealership where you plan to buy your next car until you’ve gotten a few competitive quotes from CarMax and the major used car dealers in your area.
5. Negotiate the trade-in price and the purchase price separately
Negotiating the trade-in and purchase separately will help you get the highest possible trade-in value and the best price on the new car you’re buying. Be wary of dealers who try to combine the two transactions into one, as dealers have more opportunity to make a profit when they handle two transactions at the same time.
It’s also a good idea to get your trade-in offer in writing. This protects you from the dealer changing or retracting the offer for any reason. A formal offer is especially important if you leave the dealer to look elsewhere, then return to the same dealer later.
6. Time your trade-in
Depending on the year, make, and model of your car, it may be more advantageous to trade it in and purchase another vehicle than at certain times of the year. Weather conditions and other factors can also affect the offer you receive.
Timing is everything: Four-wheel-drive SUVs are in higher demand in the winter, while convertibles sell best in spring and summer weather.
The first two quarters of the year are also a good time to trade in your car, as buyer demand tends to be higher. Dealers need to keep more vehicles on the lot to meet demand, and they’re likely to charge higher trade-in prices.
Timing is also important when it comes to paying off your current car loan. If you’re still paying off your car loan, a trade-in might not be the right choice for you, especially if you owe more on it than your car is worth. You might want to postpone your next car purchase or sell the car yourself to get a higher price.
It’s important to remember that negative equity will be carried over onto future auto loans, resulting in higher monthly payments.
The Federal Trade Commission warns against using dealers who promise to “pay off your loan no matter how much you owe.” While the dealer might pay off your old loan, you’ll have to make up the difference somewhere, and that “somewhere” will eventually catch up with you.
Conclusion
Maximizing your trade-in value can help lower the price and monthly payment of the new or used car you want, so it’s well worth doing your research, making any necessary repairs, sprucing up your car and getting multiple quotes.
When it’s time to buy, use those same research skills to compare car loans. The dealer you work with might offer in-house financing, but that doesn’t mean it’s the best deal. You might be able to get pre-approved for a car loan with better terms online and use that loan offer to your advantage when negotiating your next car-buying deal.
