Trading in your car is convenient, but you’ll lose money by not selling it yourself. Still, by understanding car trade-in values and being ready to negotiate, you can make the best of an imperfect situation.
The most important step is to look up the trade-in value of your car before you go to a dealership. Then, some additional steps will help you set a target price range to prepare for negotiations.
Why people trade in
The trade-in value of your car is well below what you would receive if you sold it to a private party buyer. For example, if you owned a 2016 Mazda 3 and decided to trade it in rather than selling it to a private party, you would get up to $4,000 less, according to NerdWallet’s car pricing tool.
Of course, trading in your car is much easier to do. Although you may lose money in the transaction, you’ll get these advantages:
- One-stop transaction for your old and new cars
- Dealer completes all registration and paperwork
- No advertising costs or time spent selling your old car
- Some states offer a tax break when you trade in
- Dealer assumes all liability for the trade-in’s condition and reliability
Because dealers understand this convenience factor, they’ll often quote an extremely low price for a trade-in. So you’ll want to know the trade-in value of your car before you go. Here’s how to find the right price range.
Car value sites and pricing guides
Mileage and condition level can have big impact on trade-in values.
Start with free, online pricing guides and appraisal tools to determine your car’s trade-in price range. NerdWallet’s car value estimator uses sales and pricing data from the National Automobile Dealers Association or NADA. It shows your car’s private party value, and once signed in, a range for the trade-in value. You should also check with Kelley Blue Book and Edmunds since there will be some variation.
Some appraisal tools ask for more specific information. Provide the car’s mileage and realistic condition; these factors mean a big difference in price. For example, a car with 70,000 miles might have a trade-in value of $14,000 while the same car with 120,000 miles would be worth just $10,500.
Getting accurate estimates
Here’s how to get the most exact trade-in value:
- Carefully read the pricing guide’s descriptions because the price difference between “good” and “average” vehicles, for example, can be close to $1,000.
- Check multiple pricing guides because there’s significant price variation between them. Then, when you’re negotiating, refer to the source that gives the highest figure for your trade-in vehicle.
- Look up private party sale prices on classified sites such as AutoTrader.com. This gives you an estimate of how much you could make selling your car to a private buyer. You can use this number to help decide how much you’re willing to give up in exchange for trade-in convenience.
The CarMax appraisal is also an offer to buy the car, which is good for seven days.
If you’re near a CarMax location, you can take your car in for a free appraisal. The process takes about 45 minutes. This gives you a more accurate trade-in price because technicians physically check the condition of your car and its history of maintenance, repairs and accidents.
The CarMax trade-in value is also an offer to buy the car, which is good for seven days. You can keep this offer when you later go to the dealership and use it as a negotiation tool. Ask the dealer to meet or beat the CarMax offer. If the answer is no, sell your car to CarMax.
Market and timing
Many factors determine the value of your trade-in besides its condition and mileage:
- The time of year and time of the month
- Your location
- Current gas prices
- The popularity of different types of vehicles, such as SUVs and pickups
- The general health of the economy
For example, convertibles attract lower prices in the northeast than they do in Florida. Hybrids and electric vehicles tend to sell better when gas prices are high.
Your trade-in might also command a higher price at the end of the month when dealerships are trying to make quotas and are hungry to make deals. Being aware of these circumstances will provide the most accurate price on your trade-in and get you the best deal.
Negotiating your trade-in price
Negotiate the trade-in price separately from the sale price of the car you want to buy.
Before you go to the dealership, set a range to use during negotiations. It’s a good idea to write this down so you can easily refer to it in the heat of the moment.
For example, the high end of your range might be $500 above the trade-in value you’ve found on pricing guides. The low end might be $500 below the pricing guide’s trade-in value. This gives you a negotiating range of $1,000.
It’s also a good idea to negotiate the trade-in price separately from the sale price of the car you want to buy. Begin your negotiation with the trade-in if you feel strongly about getting full value for your old car. If you reach an agreement on price, you can then move on to the purchase price of the car.