Trading in your car for the right price feels awesome. Your old car is taken off your hands hassle-free, and you drive off the lot that day in a shiny new ride. But before you get caught up in the convenience (and new car smell), make sure you’re getting the deal you deserve for your trade-in.
A car’s trade-in value is the credit a dealership gives you for your used car, put toward the price of the new car. It’s like turning in your used car for immediate store credit.
But car shoppers should be aware that trade-in offers traditionally are lower than the car’s retail price.
“The dealer has to do a fair amount of work to get the car ready for resale, and so they factor that in when they give you a lower price,” says Philip Reed, NerdWallet’s car-buying expert and former car salesman. “There’s a huge convenience factor involved, and the dealer knows that. So often, the dealer will give an unrealistically low offer for a trade-in.”
Still, trading in saves time, reconditioning and selling costs, and it helps get you a new set of wheels right away. Having solid numbers in mind going into the dealership will help you make a sound financial choice.
If you’re planning to trade in when you buy a car, here’s how to get the right price range for your vehicle.
Be sure to use the correct mileage and cosmetic condition of your car; these factors make a big difference on price. For instance, KBB says a 2009 Acura RDX SUV in San Jose with 70,000 miles averages a trade-in value of $13,965. The same car with 120,000 miles is $10,526 — a difference of about $3,400.
Condition can be more of a gray area. KBB reports most (54%) cars it values are in “good” condition, meaning they have “some repairable cosmetic defects” but are free of major mechanical problems.
Each website has a questionnaire to pinpoint your car’s condition. Read through the descriptions carefully to get the most accurate value, as the difference can easily add up to hundreds or thousands of dollars.
The 2009 Acura RDX SUV priced above for $13,965 was evaluated in “very good condition.” If the condition were changed to “fair,” the value drops by $1,426.
It’s a good idea to check all the pricing guides and use the one that helps you most in negotiating a good price for your trade-in.
“There’s enormous price variation between appraisal tools. That’s why it’s important to check several of them so you can find out where to get the maximum value,” Reed says.
These appraisal websites also compare your trade-in value to the private party sale value, an estimate of how much you could make selling your car to a private buyer.
For example, using Edmunds’ appraisal tool, a 2014 Kia Forte Sedan in Seattle will bring $7,564 from trading in and $9,068 from selling privately, a $1,500 difference. Of course, this figure leaves out the cost of advertising the car and time to meet with buyers.
Use this number to draw your line on how much you’ll give up in exchange for trade-in convenience. For example, you could plan to leave the dealership if you’re offered more than $2,000 under the private party price.
If you’re near a CarMax location, you can take your car in for a free appraisal. This will likely yield a more accurate price because CarMax is physically checking your car and its vehicle history report, which is a record of the car’s accidents, salvage and insurance losses from the department of motor vehicles.
The appraisal is also CarMax’s offer to buy the car, good for seven days. You can keep this offer in the running when you eventually go to car dealerships, even if just as a negotiation tactic.
Market and timing
Time of year, location, gas prices, weather and market conditions can swing your car’s trade-in price.
Convertibles attract lower prices in Alaska than in Florida. Hybrids and electric vehicles sell better when gas prices are up.
Your trade-in will also likely price higher at the end of the month. This is when dealerships need to clear out their old car models for new ones, so dealers are more generous in making deals.
Being aware of these circumstances will provide the most accurate price on your used car.
It’s important to know your car’s worth when you trade so you can get the maximum value.
Before you take off for the dealership, check local listings for cars similar to yours on websites like Craigslist and Autotrader, or consider auto consignment lots that will sell your car for you. If your car’s make and model is selling way above trade-in value, you may prefer selling privately after all.
“Its really important for the car shopper, before they go to a dealership, to know what their car’s worth. That’s probably the single most important thing. And if you can’t get a good price at the dealership, you need to explore other options,” Reed advises.
Nicole Arata is a writer at NerdWallet, a personal finance website. Email: firstname.lastname@example.org.