Automotive Loans: Trading in a Car

by Amy Lillard

(2/15/2013) When buying a new car, trading in your current used car can be a simple way to unload an unwanted vehicle and obtain money to use towards the down payment.



However, there is one significant drawback of trading in your car to a dealer. Typically, dealers offer lower pay-outs on your car than you could obtain on your own. The reasons are many, depending on the current inventory the dealer has, the time of the month, and their own specific selling numbers (and if they're close to obtaining a bonus or other internal incentive).

But there are ways to increase the money you get for your trade in, and improve the deal you obtain overall.

• Know the facts. Dealers want to pay the least amount possible for used cars, so they will make a bigger profit when reselling the car. They will bank on car owners forgoing a higher payout for the convenience they'll receive, and offer prices that are below a car's true value. It's critical, then, to know how much your car is really worth. Do research ahead of time using the Kelley Blue Book to find how much your specific car, with your unique mileage and condition, is valued. And use this information at the dealership.

• Fix the flaws. Dirt, dings and dents can catch a dealer's attention and lower the price they're willing to pay. Put the best face forward for your car by washing inside and out, touching up paint nicks, and repairing dents. Make sure the car is up to date on routine maintenance, like oil changes, fluid top-offs, and tire pressure. The extra time and effort will increase the value of the car and the money you'll receive.

• Know your options. Most of the time, consumers will decide on the dealership where they are buying a new car, and automatically trade in their old one there. Dealers know this and bank on it, offering a low deal in part because they know you're going to take it. Instead, visit multiple dealers to get an estimate on your trade-in value. With these quotes in hand, you increase your bargaining power with dealers when offering your car.

• Consider the season. Savvy shoppers know that dealers get the next year's inventory of cars at the end of the year. They're eager to unload the previous year's models. If you're looking at one of these models, dealers are likely to offer you both a better deal on the new car and a higher price for the trade in.

With these tips, you'll be in a better bargaining position with your car, and more likely to obtain a better price during the trade in process.

For Additional Reading:

10 Cars to Trade In Now for Maximum Value:
http://www.forbes.com/sites/jimgorzelany/2012/01/12/10-cars-to-trade-in-now-for-maximum-return/

Trading in a Used Car:
http://www.dmv.org/how-to-guides/trade-ins.php

 

 

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