(iSeeCars) – You are about to begin the car buying process. Which probably means you are asking yourself this eternal question: what should I do with my used car? Sell or trade it?
There are advantages to both. If you have an exceptionally clean vehicle that has driven a lot more miles than normal, you might be better off trying to sell the car yourself, as high mileage defeats trade-in value. at a dealership. Conversely, if your current car is on the junkie side, you might find a buyer who doesn’t care as much as a new car dealer.
But then you would be worth the trouble of putting your used car on the market and dealing with car buyers who may or may not have a real interest in buying. It’s simpler and easier to trade in your old car, but you’ll still need to do some prep work to make sure you get the highest trade-in value. You can also consider selling your car to CarMax or Carvana, as they will quickly determine the value of your used car and offer a purchase price. The money they provide can help you wipe out any loan balances you may have on your current car and, ideally, provide you with a full down payment for your new car.
Determine the value of your car
The process of trading in your car begins with determining the value of your car. First, take a close look at your vehicle, eliminating any personal feelings, positive or negative that may have arisen over the years. Is it too small? Not for someone who needs a small car. Too big? Someone needs this carrying capacity. Too thirsty? A matter of opinion. The wrong color? See “too thirsty”. None of these factors are legitimate regarding the trade-in value.
Legitimate factors: how many kilometers? The lower the better. Is it clean? It must be as clean as possible, or failing that, detailing it professionally – never try to trade in, or for that matter to sell to a private individual, a vehicle that needs a bath, a vacuum cleaner or whose the ashtrays are overflowing. . You’d be surprised how many people ignore this advice and pay for it in reduced trade-in value for their current car.
So what kind of shape is your old car in? Be honest. The fact that your third child was born in the backseat may have great sentimental value, but it does not increase the value of the car. You must be clinical in evaluating your exchange. And don’t take it personally if a salesperson tests your car and starts telling you everything that’s wrong. He or she may be preparing you to take less than what is worth, but if you’ve done your research, hang in there.
Several websites, including Edmunds (Edmunds.com) and Kelley Blue Book (kbb.com) offer valuation tools that will give you a rough estimate of the value of your car. Again, be honest – you might be able to ignore a few small tears in the upholstery, but a buyer or reseller won’t. Some valuation tools offer a specific estimate of trade-in value, but that’s exactly what it is – an estimate.
It should be noted that used car depreciation has not followed normal trends recently. The average used car value has actually increased by around 30% over the past 15 months, which means your car is probably worth more than you think. iSeeCars reported on used car price trends over the past few months and detailed which cars have increased the most and the least in value.
It’s also worth searching sites like craigslist.com or iseecars.com for used vehicles like yours to see what the asking prices are. Give yourself a gap of a few years, for example when looking for a 2011-2013 Ford Explorer, if yours is a 2012. Subtract 10-15% from the asking price, and that’s more than likely the actual price of the car when it changes owners.
What is your auto loan status?
It’s also worth researching the value of your trade-in versus what, if any, you owe on it, also known as your loan balance. Hopefully, your loan amount is less than the value of your car, which means you have “positive equity”. You can trade in a vehicle that you are “upside down” on, which means you owe more than it is worth, or you have “negative equity”. But the repayment amount of your old loan will be deducted from what is offered to you by the dealer.
Almost all vehicles depreciate except those that are worth more used than you paid for new. However, some cars retain their value better than others. A dealership may offer to add the extra money needed to pay off your old vehicle by ‘carrying’ negative equity on the terms of the new car loan, which can be a problem as this can continue the cycle of having negative equity on your new vehicle. loan, just like you can with your current loan. And if you have a low credit score or bad credit, the lender will most likely offer you less favorable loan terms, including a higher interest rate which can result in higher monthly payments.
Now is a great time to take a close look at the expected resale value of your next vehicle. While no one likes to think about getting rid of the vehicle they are about to buy, the reality is that you will end up selling or trading in your next car just like you trade in your current car. Use iSeeCars’ current research into which vehicles depreciate the least, and the most, to identify a model that will hold its value the best, giving you more value for the next vehicle you buy when you’re done with it. this one.
Trade in your car for a new or used car?
When it comes time to trade in your current vehicle, think carefully about whether you need a brand new car, or if you really want something newer than what you have. Used car dealers will also give you trade-in value as part of a new (for you) used car purchase, but you can’t necessarily expect to get as much for your car as you can. would do for a new vehicle. New car dealers always have a used car fleet, usually populated with very clean vehicles. Used vehicles that are “certified,” meaning they have been closely inspected and may even have a warranty, are the most expensive used cars at a new car dealership, although they may to be worthwhile. (Check out our handy guide to learn more about what a Certified Pre-Owned vehicle means.
And as for this new vehicle: On the majority of cars, you can expect a discount off the sticker price, sometimes in the form of factory or dealer incentives. This could be a very small discount if you crave a good seller, or a larger discount if it’s a slower selling model. If there’s a rebate of over $ 500, or zero percent financing is offered, there’s a good chance the vehicle isn’t selling like hot cakes. Ideally, you should get the full trade-in value of your car, plus a discount off the list price of the new car. Even non-bargaining resellers usually haggle over trade-in value if that means making a sale. Also, remember that you don’t have to buy a vehicle to use your trade-in vehicle; Exchanges are also accepted when renting a car.
Stay vigilant throughout the buying process
It doesn’t matter whether you’re buying a car or using your current car as a trade-in, always shop around and pay close attention to dealer additions that raise the sticker price beyond what the manufacturer suggests. There’s a reason they call it “suggested retail price” – new car dealers can charge whatever they want. If you are offered far more than your trade-in value, the dealer might try to recoup it by charging more for the vehicle you buy. Always focus on the difference between what the dealership gives you for the trade-in value and the agreed upon purchase price of the car you are buying.
After you’ve negotiated the best price for your car, beware of the person in the pretty glass office who closes the deal. He or she may try to sell you accessories, scratches, an underlay, an extended warranty, bigger wheels and tires, insurance on the loan itself, a higher interest rate loan, a longer repayment schedule, a lower exchange than what has been discussed. value for your car, and anything that will increase the dealership’s bottom line.
Buyers often assume that once the purchase price is fixed and the trade-in value agreed, the deal is done. But the deal isn’t done until all the documents are signed, and you need to take a close look at the additional costs as the deal is finalized. Sales tax and registration fees are inevitable, and some “documentation” fees make sense, although you will need to ask the dealer for each of them to confirm what you are paying.
Remember this: they are professional car dealers. You are an amateur car buyer. If you’re easily swayed, or you’re not sure if you can find the best deal, take this car-crazed friend who’s probably been through this car buying process a lot and understands the nuances – someone who is emotionless. , can say “no” if the deal is not a very good deal.
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If you are interested in a new or used car to replace the vehicle you trade in or sell, be sure to check out the award winning price of iSeeCars car search engine. It uses advanced algorithms to help buyers find the best car deals for all types of vehicles and provides key information and valuable resources, like iSeeCars free VIN verification report and Best cars rankings. Filter by make, model, price and special features to find the best deal on your next vehicle.
This article, How does a car trade-in work?, originally appeared on iSeeCars.com.