There are many things you can do to help increase the value of your trade-in, but, ultimately, how much you get for your vehicle depends on how much a dealer is willing to give you. This is one reason it’s important to get multiple appraisals on your car before you accept an offer.
Trading in Your Car
When you need a new vehicle, a trade-in can be a good way to cover your down payment. If you own your car outright, the entire actual cash value of it is yours to use how you see fit.
However, if there’s a lien on your vehicle, you have to pay it off before you can use the balance for a down payment on another auto loan. You can only do this with a trade-in if there’s equity in the car.
Equity means you owe less on the loan than the value of the vehicle. If there’s enough equity in your trade, you can pay off your loan, and use all or some of what’s left for a down payment. If there’s equity but not enough to cover the entire down payment requirement, you have to come up with the rest in cash.
If you have negative equity, then you owe more on the loan than the car is worth, which means you’re upside down in the vehicle. In this case, the lender may allow you to roll the negative equity into a new loan, but you're better off avoiding this.
When you roll over negative equity, you end up with a bigger loan. This means your monthly payment and total cost increase, since more interest charges accumulate on the bigger loan balance. This could make your next trade-in situation worse, and put you on the so-called “trade-in treadmill.”
Finding Estimated Vehicle Value
To ensure you get the most out of your trade, you should know where to go to get an estimate of its value, and what dealerships are looking for in a trade-in. Trade-in value is based on the year, make, and model of a car, along with its condition, mileage, and desirability.
In order to find out the estimated value for your vehicle, you can check valuation sites such as Kelley Blue Book, NADAguides, or Black Book. When you check these sites, be sure to enter the information about your car as thoroughly and accurately as possible, or you could get an estimate that’s way off base.
Also, be aware that these sites offer different prices depending on whether you’re selling privately or to a dealer, so be sure you’re checking the right price.
Tips for Increasing the Value of Your Trade-In
To help you get the most for your vehicle, try these five things:
- Make sure it’s up to date on service – Before you attempt to trade in your car, make sure all the maintenance it needs is done, and save the records from the service. Having a well-cared-for vehicle and up-to-date service records can increase how much a dealership is willing to give you.
- Do minor work, but don’t break the bank – If you have some dents and dings or other superficial flaws that don't cost much to take care of, it might be worth it for you to get them fixed. However, you're likely better off steering clear of any major work, as you're unlikely to recoup what you spend in what you get for your trade-in.
- Make sure it’s clean – A thorough cleaning both inside and out is a must before you take your car in for an appraisal. You can also splurge for a detail, which shouldn’t cost too much. This isn't necessary, but it can help you make a good impression when you go to trade it in.
- Negotiate trade-in and new vehicle price separately – Focus on locking down a good price for the car you’re interested in before you mention your trade. When a dealer looks at both vehicles like a package deal, you may not come out on top.
- Shop around for the best deal – When you shop around and get multiple appraisals, you can pick out the best deal for you based on real numbers rather than estimated values. Appraisal offers are typically good for about seven to 10 days. It’s a good idea to visit both independent and franchised dealerships, and make sure at least one is specific to your car’s make.
Get the Most Bang for Your Buck
If you’re looking to trade in your vehicle and you have bad credit, you need a dealer that can work with your situation. Auto Credit Express can help you find a local special finance dealership.
By filling out our fast and free auto loan request form, we can get you matched to a dealer in your area that has the lending resources you need! Don’t delay, get the process started right now!