Trading in a car is the Achilles’ heel of the car-buying process because it’s tough to get the dealer to give you the full value of your old car. But understanding how to trade in a car and how to gather offers will help you maximize your trade-in’s value and get a better overall deal.
When you trade in your car, your old vehicle’s value is deducted from the new car price. To get the highest amount, it’s essential to know that you can separately negotiate the trade-in value and the new car price.
We’ll break the trade-in process into separate steps and show you how to:
Price your trade-in
Consult online pricing guides to find the value of your trade-in.
The first step is to estimate your car’s trade-in value with online pricing guides.
With NerdWallet’s car value tool — which uses pricing data from the National Automobile Dealers Association, or NADA — you can answer a few simple questions about your car to see the private-party price. Then, sign in to see the trade-in price range for your car, as well as other information about your car expenses.
» SIGN UP: See your car’s trade-in value
It’s a good idea to consult trade-in values from multiple pricing guides, like Kelley Blue Book and Edmunds. These appraisal tools ask for additional details about your car. Be sure to include all the car’s options, the correct mileage, a realistic condition level and your ZIP code for the most accurate value.
With these figures, you can set a target trade-in price range for your negotiations.
Solicit quotes for your trade-in
Before you get trade-in quotes from dealerships, collect the documents and other items you’ll need, which may include:
- Vehicle title (often called a “pink slip”)
- Auto loan payoff and account information (if you have an auto loan)
- Current vehicle registration
- Driver’s license
- All vehicle keys
To get quotes, call or email dealerships’ internet departments. Tell them you’d like to buy a car there but want a fair price for your trade-in. They may give you a trade-in estimate based on your description of your vehicle’s condition. Most dealers will only give firm trade-in quotes after a physical inspection of the car.
Call at least two dealerships to make an appointment for a trade-in appraisal with the used-car manager. Consider starting at CarMax, if there’s a branch near you, to secure a no-haggle offer that’s good for seven days.
Choose an offer
Keep the trade-in and purchase negotiations separate and check each price against online guides.
To get the best deal possible on your new car, you’ll want to make sure both the trade-in value and sale price you’re offered are in line with those listed on online pricing guides.
Remember, the trade-in price is really just a credit deducted from the negotiated new car price. So, look for the lowest overall price after making this calculation.
While researching trade-in values and comparing offers, also consider your car’s private-party price. If that figure is much higher than its trade-in price, you might decide to sell your car yourself.
Close the deal
When you own your car outright, trading in your car is simple: The trade-in value is deducted from the new car price. You then pay the remaining amount for the new car with cash or with an auto loan.
If you’re downsizing and your trade-in is worth more than the new car, the dealership will give you a check for the balance. If money is owed to you, be sure to get the exact amount in writing.
The trade-in process is a little more complicated when you have a car loan.
Things can get a bit more complicated when you still owe money on your trade-in.
If the trade-in value is worth more than the remaining balance on your auto loan, this difference (the equity) is credited to the sale price of the new car.
But if you’re upside-down on your car loan for your trade-in, meaning you owe more than your car is worth, you’ll have to pay this difference when you trade it in. For example, if your vehicle is valued at $3,500 but you owe $4,000, you’ll need to pay an extra $500.
Here are several tips to help you handle this situation:
- Try to make a cash payment for the difference (the negative equity)
- Avoid rolling the negative equity into the new car loan; only do so if it’s a small amount
- If you’re significantly upside-down, consider waiting until you have equity in the car before you trade it in