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When it’s time for a new car, the question of what to do with your current one naturally arises. While some choose to sell their car privately, this option can involve significant hassle and potential risks. A simpler alternative is trading it in.
In this guide, we’ll tackle common questions about vehicle trade-ins and provide the insights you need to strike a confident deal—one that could save you thousands. Although trade-in values are typically lower than private sale prices, the convenience, safety, tax benefits and reduced post-sale liability make trading in an appealing option.
Trading in a car involves selling it to a dealership as part of purchasing a new or used vehicle from the same dealer. Essentially, it’s like exchanging your car for credit, which reduces the amount you need to pay upfront or finance for your new vehicle.
While you should typically begin by doing some research into your car’s value on your own (we’ll discuss this more below), the dealer will assess your car’s value based on market price, mileage, condition and features.
Market demand is also taken into consideration, as well as any repair costs needed to prepare the car for resale. Once you’ve found the car you like, you can begin discussions about trade-in value with the dealership.
Find your car’s value and get a TrueTrade™ offer in minutes.
Start Your ResearchKeep in mind, some states, such as Florida, allow for tax savings on trade-in value. For example, if you’re buying a $40,000 car, and your trade-in is worth $20,000, you’ll only pay tax on the difference; so, in this case, if your tax rate is 6%, you’ll pay $1,200 in taxes instead of $2,400.
If you’re worried about how to trade in a car that’s not paid off, fret no more! Many people still owe money on the vehicles they trade in for new vehicles, and while dealerships are prepared to handle this very common scenario, the process can look a little different depending on how much you owe on your existing loan:
A variety of reliable online tools, like TrueTrade™, Edmunds, Carfax and Kelley Blue Book, can help you determine your car’s value. These popular resources provide an estimated trade-in value based on key details you input, such as your car’s make, model, year, condition, mileage, VIN (Vehicle Identification Number) and any additional features or accessories.
Remember, dealerships will always appraise your vehicle when you trade it in or sell it to them, but it’s wise to understand what your car is worth before heading into negotiations.
Avoid aftermarket modifications to maximize your trade-in value. Non-factory paint jobs and suspension upgrades, for example, narrow the pool of buyers who may be interested in your vehicle.
Take time to make your car as presentable as possible before heading in for a dealer appraisal. Consider full-vehicle detailing, fixes to a damaged windshield and repairs to minor dents and scratches.
Before you sign an agreement or complete your trade deal, consider having several dealers look at your trade and extend an offer; different buyers sometimes offer different amounts based on supply and demand.
Find your car’s value and get a TrueTrade™ offer in minutes.
Start Your ResearchMost dealerships accept multiple vehicles for trade, as this allows them to expand their used car inventory—which is expected to remain tight for years—and potentially make a profit. Before proceeding, however, check with the dealership first to make sure they’re comfortable with this approach and can accommodate your request.
Take time to determine the current market value and any loan balance of the second car you’re trading in, just as you would your first. The combined value of both cars is important to know since this will impact the final price you pay or finance on your new vehicle.
In final preparations for trading in your vehicle, make a checklist of items you’ll need to have on hand:
In addition to the above-listed items, you’ll want to call the dealer in advance and ask about any tax forms, pay stubs or bank statements that may be needed.
Once you’ve done your research and have a clear idea of your car’s trade-in value, the next step is negotiating with the dealership. A little preparation and the right approach can make a big difference in the offer you receive. Here are five essential tips to help you maximize your trade-in value and secure the best deal.
Trading in your car can be a smooth process, but there are common mistakes that could cost you money or complicate the deal. By avoiding these pitfalls, you can ensure you get the best value for your trade-in and make the process as hassle-free as possible.
As with most aspects of the car-buying process, vehicle trade-ins can be a seamless and stress-free experience with a little preparation and organization. Having a complete transaction all in one place is essential for busy people on the go or those who wish to avoid scams. By ensuring that you’re getting a good deal on every element of the transaction, your new car is sure to be even more attractive.
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AAA’s car buying program can help you trade-in or sell your car by answering a few questions. You’ll see your car’s market value and get a cash offer in minutes. Cash out or trade in for a new or used car.
Yes, you can trade in a leased car, but the process is slightly different. The dealership will pay off the remaining lease balance and any equity (or negative equity) will be factored into your new purchase. Be sure to check your lease agreement for early termination fees or other conditions.
Dealerships will still accept cars with damage, but the trade-in value will be reduced to account for repair costs. If the damage is minor, consider fixing it beforehand to maximize your trade-in value.
Higher mileage typically lowers your car’s trade-in value, as it indicates more wear and tear. However, if your car is well-maintained and in good condition, it may still hold decent value.
Yes, you can trade in a financed car. If you owe less than the trade-in value, the difference can be applied to your new purchase. If you owe more, the negative equity can often be rolled into your new loan, though this may increase your monthly payments.
Most dealerships allow you to trade in multiple vehicles toward the purchase of a new one. The combined trade-in value of both cars will be applied to the cost of your new vehicle.
Yes, aftermarket modifications like custom paint jobs or suspension upgrades can lower your trade-in value. These changes often narrow the pool of potential buyers, making the car less appealing to dealerships.
Absolutely! A clean, well-maintained car makes a better impression and can positively influence the dealership’s appraisal. Consider a full detailing and minor repairs to maximize your trade-in value.
Research your car’s value using tools like TrueTrade™, Kelley Blue Book, Edmunds or Carfax before visiting the dealership. Having a clear idea of your car’s worth will help you negotiate confidently.
If your title is held electronically (common with financed cars), the dealership can usually access it and handle the paperwork. If you’ve lost your title, you’ll need to request a replacement from your local DMV before trading in.
Yes, in many states, you only pay sales tax on the difference between the price of the new car and the trade-in value. This can result in significant savings.
Yes, many dealerships will accept non-running vehicles, but the trade-in value will be significantly lower. Alternatively, you can sell the car to a junkyard or use it for parts.
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