According to the statistics, about a half of all car purchases in the US include a trade-in. Even though you usually get less for your car than in the case when you sell it privately, a trade-in can be a very convenient option. First off, it frees you from a hassle of advertising your car, paying for the ads and arranging meetings, vehicle demonstrations and test-drives for prospective buyers. In addition to that, the dealership handles most of the documentation required for the credit, sale and transfer, so in many cases you just sign the papers and are ready to drive a new car.
To get the most out of the deal you need to follow the simple principles: get a good appraisal, search around for the best deals and be sensible in your expectations.
An appraisal of the car is a first step and the cornerstone of a trade-in process. You need to have all your vehicle’s options and its condition accurately assessed. Remember, that the offers at various dealerships may vary depending on the car’s general condition, the dealer’s current stock and the vehicle selling potential. Contrary to the popular beliefs, don’t try to impress the dealer with a recently polished car, new set of tires or some dent fixes. Your vehicle should be in a good and clean condition, but not necessarily sparkling-shiny; and the dealer can usually fix small flaws or get new tires for a much cheaper price. Aside from that, keep level-headed about the value of your car, no matter how you are attached to it. You don’t need to fight for a maximum offer—better try to negotiate a favorable price for a new car instead.
A major thing to remember during a trade-in is a negative equity—that is to say, if you your car’s payoff is higher than its current value. In such a case you’ll have to pay the difference. The dealers can add its amount to the new car loan or deduct it from your down payment, or provide some incentives. Either way, make sure how your negative equity is treated before you sign the papers.
All in all, if you have reasonable expectations and avoid common mistakes we’ve mentioned, a trade-in will be a smooth experience.