You're finally in tip-top financial shape to purchase a new car, but there's one problem: How will you get your existing set of wheels off your hands?
You don't have the time to deal with the hassle of a private sale, and you have no desire to auction it off.
You decide a dealer trade is the best way to earn cash for your vehicle with no strings attached. Afraid of getting lowballed by the car salesman? Don't fret. Conducting research on the trade-in process and your car's value will equip you with the tools needed to demand top dollar for your ride.
Let's start with this video we did last year called "How to Sell Your Car for More Money."
How trade-in values are determined
According to CarsDirect, five factors determine the trade-in value:
- Year. Newer models get the most attention from used-car shoppers. "When a dealership anticipates a quick sale, they are more willing to pay a higher price for it," CD says.
- Make and model. If the model holds value or is in high demand, the resale amount will be decent.
- Condition. Both the exterior and interior appearance are a component of the vehicle's appraised value.
- Mileage. The higher the mileage, the lower the trade-in value. "Even if the vehicle's condition is impeccable, an odometer reflecting high mileage may make a consumer less willing to purchase a car at a price acceptable to the dealership," CD says.
- Desirability. If your car is popular among consumers, you're in luck.
So, make note of the mileage and condition of your car. Then, visit a site such as Kelley Blue Book to get an idea of what the trade-in value will be. Note: These sites often offer several different prices, including the trade-in value and one for private sales, so make sure you're checking the right one.
Edmunds says the trade-in value will be less than that for a private sale, which requires more effort on the owner's part.
Keep in mind that values can also be different based on where you live and what's popular in your area. So be sure to look at what similar vehicles are selling for in your community or state. Check newspaper ads and other local sources.
So now you're prepared to negotiate a decent price. Is the offer you're getting from the dealership fair? Scott Painter, CEO of California-based automotive search company Zag, told Bankrate:
For a resale, the average dealer is looking to make between 2 and 4 percent on a transaction. So take whatever your car's value is and add in whatever cost it would take to refurbish the vehicle. Then, add in 2 to 4 percent, and as long as the trade-in price you're given is in that window, it's probably a fair deal.
Now let's look at some ways to improve your trade-in's value.
1. Bring the maintenance up to speed
I'm not suggesting you spend a load of cash and give the car a complete makeover. But the better the condition, the more money you'll make. AutoTrader notes:
When it comes to making repairs to your used car, you need to determine whether or not the repairs will actually increase the value of the vehicle at resale time. Most importantly, you need to determine if you'll be able to increase the selling price of the car enough to recoup the cost of those repairs.
2. Don't forget about the body work
Too many dents, dings and scratches can be hard on the eye. So, suck it up and fork over the cash to have them repaired.
Said Dan Ingle of Kelley Blue Book, "Dent removal experts can be very affordable -- often charging only $100 to remove several dings. You will be saving the buyer the headache of taking it to the body shop."
"For a major dent where a panel needs to be repaired, it makes even better financial sense to fix it," Ingle advises.
3. Provide service documentation
This information should be present on the Carfax report, if one is acquired, but don't take any chances. "Any and all fluid changes, tire rotations, paint or body repairs, engine repairs and service and any other related maintenance documentation is important to have because it demonstrates to a dealer the care the vehicle has received during the time you owned it," says AutoTrader.
If you didn't keep the receipts, ask the shop you used for the documents.
4. Detail your ride
Some consumers are more interested in a visually appealing vehicle than they are with what's under the hood. Sheronde Glover, founder and CEO of Car-Buy-Her, told Bankrate:
"Make sure your car is clean. A good detailing job might cost about $50, but it could increase your car's value by several hundred dollars."
Want to do it yourself? Check out AutoTrader's comprehensive auto-detailing checklist here.
5. Negotiate the selling price separately
Don't mention your trade-in until you've negotiated the purchase price of your new vehicle. Otherwise, the salesman will talk about them as a package and make the deal you're getting a source of confusion. NewCars.com advises, "If the dealer asks if you plan on trading in your car, do not say yes or no, just say 'Possibly, but let's just talk about the new car price first.'"
6. Shop around
Not satisfied with the final offer for your trade-in? Shop around at a few more dealerships, and you may be able to get more than you were initially quoted because the demand varies by location. If a vehicle identical to yours has been sitting on the lot for a month, don't expect to get top dollar for your trade-in, Bankrate says.
What tricks have you used to boost your car's trade-in value?