How to Trade In Your Car: A Guide
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- Still owe money?
- Shop around
- Finalize offer
Before you trade in your vehicle, you’ll want to know its value, compare offers from different dealers, and negotiate to get the most money back.
However, be sure to carefully consider the pros and cons between trade-ins and other alternatives like a private sale.
Considering trading-in? The car insurance comparison shopping and broker app, Jerry has gathered everything you need to know about trading in a car (and how to get the best deal while doing it).
Research how much your car is worth
Find information about your vehicle and get estimates from different dealers so you know the fair price for your trade-in. This way you’ll know when you’re being lowballed by a dealer.
You can use websites like Kelley Blue Book or Edmunds to look up information about the make, model, and condition of your car to determine a fair price.
Make sure you try not to overestimate the value of your vehicle. It seems counterintuitive but you don’t want to make any car repairs either. The dealer will most likely be able to fix any problems for a lot less money. So, keep in mind that spending money on repairs likely won’t help you make more profit on your trade-in.
Remember, don’t tell a dealer you have a higher trade-in offer somewhere else in an attempt to squeeze more money out of them. Experienced dealers will know that you’ve inflated your price and they’ll definitely ask to see the offer in writing.
Key Takeaway Using Edmunds or Kelley Blue Book to understand the value of your car will give you confidence for negotiating a fair trade-in price.
Do you still owe money on your car?
If you still owe money on your car loan, you can still trade it in.
However, if you owe more than the car is worth, the balance will be transferred to the loan for your new car. This is called negative equity or an “upside-down loan”. For example, if your car is worth $7,000 but you still owe $12,000 on your loan, that means you’re holding $5,000 in negative equity.
If the trade-in value of your car doesn’t match the loan, you’ll be saddled with higher monthly payments on your new car. If you have negative equity, when you get offers for your trade-in, make sure to consider whether you can afford higher monthly payment amounts.
If not, look into other options for selling your car at a better price. You don’t want to be caught in a vicious cycle of having loans stack up, and paying a lot more than your car is worth.
Shop around for estimates
Get multiple estimates and offers to make sure you’re getting the best price. You can go to a used-car dealer or the dealership for your specific vehicle make and model when getting an appraisal.
Be wary of offers that seem too good to be true. Examine offers carefully and ask questions if you’re unsure about how the dealer came up with the offer.
Generally, dealers will look at things like vehicle condition, color, and matching tires to come up with the value of your vehicle. This is how dealers appraise your car.
There are a lot of different ways to get appraisals. The most common methods are either getting estimates online or going to a local dealership after booking an appraisal appointment.
Don’t be afraid to negotiate
If you have a good understanding of your car’s value and are fielding multiple offers, don’t be afraid to negotiate and counter-offer with higher trade-in amounts.
There’s always room to negotiate, especially if it’s the first offer. You might have better leverage if you go with an offer at the dealership where you plan to buy your car. This can help you decide between similar offers.
Don’t fall for a dealer trying to sow doubt about how much your car is worth. If you’ve done your research, you can confidently push back in this scenario.
Timing might also matter. If you’re not in a rush to sell your vehicle, you can wait for special promotions.
Key Takeaway If you know the fair price for your vehicle, you don’t have to settle for lowball offers. Negotiating is a common part of the trade-in process.
Finalize the trade-in
If you are getting the trade-in offer as a credit on your new vehicle, make sure you have this in writing. Otherwise, you can expect to get a cheque for the trade-in amount.
Be on the lookout for extra fees tacked on to your offer and read the fine print before you sign your contract. In the meantime, make sure to clean out your car and remove any personal information from your car’s electronic systems.
Remember to cancel insurance policies on your old car. Switching your insurance policy from one vehicle to another is an easy process. Be sure to align the policy transfer with your new car’s purchase date—you don’t want to have any lapses in your coverage.
Sometimes. premiums can increase when you trade in your car. You can call your insurance provider to make sure your rates haven’t skyrocketed.
Also, you can use Jerry to make sure you’re getting the most affordable rates on your car insurance. You won’t have to make any calls, and the app will compare quotes for you. Not only that, the average Jerry driver saves $879 on car insurance a year!
Key Takeaway Make sure to read the fine print on your contract before you sign it, and look out for add-on fees.
Things to consider before accepting an offer
Make sure you know exactly how much you’ll still have to pay for your new car after a trade-in and whether that works for your budget. Likewise, you need to be financially prepared before taking on any loans for a new vehicle. You should keep in mind that trade-ins aren’t your only option.
You can sell your car privately, go to a used car superstore, or get an instant cash offer online. The first option is the most common alternative.
Here is a breakdown of the benefits and disadvantages of trading in your car.
The benefits of trading in
- You don’t have to schedule test drives
- You only have to pay tax on the difference between the trade-in and the new car
- Usually a quick and easy process
- Dealers have a good understanding of your car value
- You don’t have to take care of paperwork
- All your transactions happen in one place
The disadvantages of trading in
- If you sell the car yourself, you’ll probably get more money back
- There are many sites you can use to sell your car for potentially higher offers
- The price of your new car might be marked up if you buy it at the same trade-in dealer
Should I sell the car myself or trade it in?
Carefully consider the benefits and drawbacks of trading in your car versus selling it privately. Generally, you’ll make more money selling it yourself, but trading in a car might be a lot more convenient.
Can I trade in a car when I’m still paying off the loan?
Yes, but it’s not always the best idea. Keep in mind that you’ll have to pay the difference between your trade-in and your loan. Also, you should consider whether taking on the costs of the previous loan and a loan on your new vehicle in tandem is feasible for you.
Can I trade in a car that needs repairs?
Yes, but the trade-in value will be impacted depending on the issues. You don’t need to fix small dents or scratches on your car and it won’t help you increase the value of your trade-in.
Dealers can usually repair your car for cheaper but the severity of the damage will affect the car value.
Does my car insurance automatically transfer to my new vehicle?
If you’re with a reputable insurance company, you should still be covered in your new vehicle. But it’s better to call your agent to make sure that’s the case. If you’re worried about your premiums increasing, download Jerry to get the best price on a new car insurance policy.
If you need to switch providers, the free app will take care of this for you and you won’t have to fill out any forms. Jerry will even cancel your old insurance policy for you and make sure you’re always getting the most affordable rate for your coverage.
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