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Trade-in Value - Trade-in Price |
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Trade-in value or trade-in price is the credit or "allowance" that a dealer offers a customer for a trade vehicle when the customer is buying a new car. Trade-in credit reduces the cost of the new car, like a down payment. Some states have laws that may also provide sales tax credit for trade-in vehicles, effectively reducing sales tax on the new car. Obviously, you as a new car buyer, want as much credit for your old car as possible. However, most people don't know the trade-in value of their vehicles. It's often the subject of heated negotiation in a car deal because the dealer wants to pay as little as possible and the customer wants to be given as much credit as possible. It's best if you, the customer, knows the approximate value of your trade-in vehicle before you walk into the dealer's showroom. You should also know your current loan balance if you are still paying on your car. If your loan balance is more than the trade-in value, you are upside down, which works against you in a trade. If at all possible, it's best to keep the trade-in discussion with your dealer completely separate from the new-car buying or leasing discussion. Find trade-in values in used-car price guides such as Kelley Blue Book and NADA Used-Car Guides, which are commonly called "blue book" car price guides. Be sure you take into account your vehicle's condition, age, mileage, and equipment, all of which affect your vehicle's value. Where you live also affects values. It's important to understand that all used car prices in pricing guides are just educated valuations based on a variety of dealer car auction data and trade transaction data, which means there will be differences, sometime large differences, in values from different guides. This often frustrates consumers who assume that used car sale prices and trade-in prices are "standard" and fixed. Which guide is the most accurate? Which is best? Which is the "true" guide? The answer: None of them. Hopefully, the values from different guides will be close enough to provide a fairly close approximation of "actual" value. Used car managers at auto dealerships know from experience what cars will sell and for how much. They expect to make a nice profit, and offer trade-in prices accordingly. Dealers make much more profit from used cars than brand new cars — up to seven times as much. For that reason, you'll always get more money for your old vehicle by selling it yourself and not involve it in your new-car transaction at all. Remember, dealers pay wholesale prices for trade-in vehicles. You can get closer to retail price if you sell your vehicle on your own.
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