It’s still a seller’s market for used cars. Used car inventory remains thin, meaning dealerships are motivated to pay a good price for your car.
If the market changes have encouraged you to trade in your car for a new set of wheels, don’t speed to the dealer and miss a good deal. Follow these steps to boost the car’s trade-in value and negotiate the best price.
1. Do your homework
Knowing the value of your car is important, particularly if you plan to trade it in. Research to find your vehicle’s current trade-in value. You can use sources like Kelley Blue Book, True Car and Edmunds to get its current values, you should also be honest with yourself about repairs and your vehicle’s condition. You likely won’t get the current value as a car trade-in unless the car is in truly pristine condition.
Remember that you’ll get less for your trade-in than you would if you sell your car on your own. Many people think they are going to get the top value, but dealers taking in the trade need a margin of profit and will offer you less than the trade-in price listed on these sites.
2. Take care of known mechanical problems
The mechanical and physical condition of your car are big drivers of value. So, it’s best to resolve any issues that are relatively simple to fix. In general, minor repairs that don’t cost much out of pocket are likely to increase the resale value of your vehicle. This might include small cosmetic fixes such as dents and scratches or replacing lights that are blown out.
Research repairs that increase the resale value of your car and the expense associated with each repair to decide which repairs will be the most cost-effective. You can use websites like www.repairpal.com.
You should also check with the National Highway Traffic Safety Administration database for any vehicle recalls affecting your car. Recalled parts can be fixed free of charge, and the extra effort may increase your car’s resale value.
Keep receipts for repairs and maintenance. These can prove to the dealer or buyer that you cared for the vehicle.
3. Make sure that your car looks its best
A clean and well-maintained car is most likely to get the highest trade-in value. This may sound obvious but many people bring cars in for trade and it’s not clean inside and out. Detailing the car is like staging a home for resale definitely increases the resale value. In other words, curb appeal matters.
4. Shop around for trade-in value
It’s important to shop around your car for trade-in potential. Get as many competitive quotes for your trade-in as possible before agreeing to a price with the dealer. Seek quotes from CarMax and any other major used car dealers in your area before discussing your trade-in with the dealer you plan to buy your next car from. This help you know the current market value of your vehicle in your area.
5. Negotiate car trade-in value and purchase price separately
Negotiating your trade-in and purchasing separately ensures you get the best trade-in value possible and the best price on the new vehicle you’re buying. Watch out for dealerships that try to combine the two transactions into one deal. They do this because there are more opportunities for a dealer to generate profits when working on two transactions at once.
It’s also a good idea to get the trade-in offer in writing separately. This protects you from the dealer changing or going back on its offer for any reason. A formal offer is especially important if you leave the dealership to shop around further and return to the same dealer later.
6. Time your trade-in
Trading in your car to buy another vehicle may work better some times of the year than others, depending on the year, make and model of your vehicle. Weather conditions and other factors could also affect the offer you receive.
Timing is everything, all-wheel-drive SUVs would be in high demand during winter, and convertibles are best to sell in spring and summer weather.
The first two quarters of the year can also be a good time to trade in a vehicle because buyer demand tends to be higher. Dealers need more vehicles on their lots to meet the demand and may offer a higher price for your trade-in.
Trading in a car when you owe money on it
Trading in your car may not be the right choice if you’re still paying off your car, particularly if you owe more than your car is worth. You may want to postpone your next car purchase or sell the car on your own to earn a higher price. But if you trade it in, the negative equity doesn’t just disappear it is rolled into the subsequent car loan. This will make your monthly payment higher.
The Federal Trade Commission (FTC) cautions against using a dealership that promises to “pay off your loan no matter how much you owe.” While a dealership might pay off your old loan, it must make up the difference somewhere — and that “somewhere” will eventually catch up with you.
“Dealers may include the negative equity in consumers’ new car loan,” writes the FTC. “That would increase their monthly payments by adding principal and interest.”
The bottom line
Ensuring you get the best trade-in value can help you get a lower price and monthly payment on the new or used vehicle you want. It’s well worth it to research, make much-needed repairs, spruce up your ride and secure multiple quotes.
When it’s time to buy, use the same research skills to compare auto loans. A dealership you’re working with might offer in-house financing, but that doesn’t mean it’s the best deal. You may be able to get pre-approved for an auto loan online with better terms and use the loan offer as leverage when negotiating a deal on your next car purchase.
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Lauren Fix, The Car Coach is a nationally recognized automotive expert, media guest, journalist, author, keynote speaker and television host. A trusted car expert, Lauren provides an insider’s perspective on a wide range of automotive topics and safety issues for both the auto industry and consumers. Her analysis is honest and straightforward.