Car Buying

Should you trade in your car?

How to determine the right trade-in price for your car

Trading your car in and applying its value to the purchase of a new car is the easiest way to get rid of your current ride. There's no need to sell it yourself, craft a used car listing, deal with potential buyers and the general hassle that goes with it all. It's obvious why trading in is such an appealing option.

Yet, it's also going to be an expensive option as the difference in "trade-in" versus "private party" value is typically measured in thousands of dollars. You must really ask yourself, how much is that convenience worth to you?

To best answer that question, you'll need to know how much you'll be offered in either case. There are numerous online sources that will calculate what your car is worth. For this, you will need to know your car's year, make, model and trim level, plus any options it might have. The current mileage is another necessity and you'll be asked to determine its current condition. Unless you own a museum piece, it won't be getting the best-possible rating. Selecting the next-best is therefore the place to start should your car be well-maintained and undamaged. Be honest here: it does you no good to rate your clunker as "outstanding."

At this point, you will likely be presented with three values: trade in, private party and dealer retail. The latter is what a dealership would sell a car like yours for. This is merely a reference point — you basically have no chance of getting this. Instead, use the trade-in and private party values as reference points. Seeking different quotes from different sites also isn't a bad idea.

Now, you can simply go to the dealership where you're buying your next car, ask them to appraise your potential trade-in, then see where they are relative your online quotes. Generally speaking, they are going to be massively under those quotes. You'll be shocked, possibly offended. Trade-ins are a way dealers can make money on the deal and as such, they will try to profit as much as they can.

So, what now? You can negotiate since almost everything in a car deal is negotiable. You at least have the online quote to work from and you can also have an idea of how much you personally want for it. Keep in mind, however, that dealers can always give you more for your trade-in but offer less of a discount on the new car. Settling on the new car price before moving on to the trade-in is therefore a good idea.

Should you want an even better idea going into that negotiation, however, getting an in-person appraisal before then is helpful. Since that appraisal is divorced from the new-car purchase, you have a better chance of getting a realistic quote. You can take it to a reputable used car lot or another new-car dealership (making an appointment for early in the day is recommended), but CarMax is always a good bet as they'll give you a price quote that'll last for a week — if you take it, CarMax will buy your car with no obligation to buy from them. Generally, CarMax will offer values more in-line with online quotes when appraising top-selling cars in popular colors — if you have a silver Honda Accord, you're probably in luck.

Along those lines, the type of car you have definitely comes into play when deciding between trading in and selling it yourself. Mass-market cars like the Accord will have greater appeal to any dealership than a low-volume car with a niche market — they don't want any more hassle in selling it than you do. So, if you have a special edition, a collector's car or even just insanely low miles, a used car lot or even the online quote system may not have the data necessary to acknowledge that value. In those cases, selling it yourself is without question the better bet. Internet listings or auctions will open the door to a literal world of potential buyers who have a much better chance of correctly valuing your car. In this case, try to find what others online are selling cars like yours for.

And should you decide to go the private party route, make sure to watch our below video highlighting the 4 Basic Steps to Selling Your Used Car:

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