How to Trade in Your Car

A few simple steps is all it takes: Get a price for it, gather quotes, compare offers and close the deal.
Auto Loans
How to Trade in Your Car

Trading in your old car is more about convenience than saving money. Most people want to get everything done at once, and the dealership is happy to do that — for a price. Still, understanding how the trade-in process works and how to maximize your old car’s value will help you get the best deal possible.

To be clear, “trading in” means that your old car’s value is deducted from the negotiated price of your new car. And it’s important to know that the value of the trade-in and the price you pay for the new car are separately negotiable. In this article, we’ll show you how to get a price for your vehicle, collect quotes for your car’s trade-in value, choose an offer and close the deal.

Price your trade-in

The first step is to estimate your car’s trade-in value. Put the details about your vehicle into online pricing guides like Kelley Blue Book and Edmunds and look specifically for the trade-in price. Be sure to include all the car’s features and options, along with the correct mileage and your ZIP code.

Use online pricing guides to find the value of your trade-in.

While researching trade-in value, also look at your car’s private-party value. If that value shows your car is selling for much higher than its trade-in price, you might decide to sell your car yourself to pocket more money.

Get some quotes

Before you get trade-in quotes from dealerships, collect the documents and other items you’ll need, which vary from state to state but 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 and remotes

To gather quotes, one option is to call or email dealerships’ internet departments. You can tell them you would like to buy a car there but want a good price for your trade-in. They may be able to give you an estimate based on the description of your vehicle’s condition, which can point you toward dealerships to work with. But most dealers will give trade-in quotes only after a physical inspection of the car.

Call dealerships in advance to make an appraisal appointment.

Select at least two dealerships to visit. Call each in advance to make an appointment with the used-car manager so the process goes smoothly once you arrive. Ask for “an appraisal of my vehicle.”  Consider starting at CarMax, if there’s a branch near you, to secure a no-haggle offer.  

Choose an offer

When you trade in your old car, you can immediately apply the value of the trade-in to your purchase of a new car from the dealer. This is convenient, since you won’t go a day without transportation. But it also means that to get the best deal possible on your new car, you’ll want to make sure both the trade-in value and sale price are competitive. 

Keep the trade-in and purchase negotiations separate and check each price against online guides.

For example, say you have two trade-in offers. If the sale price for the new car you want is much too high at one dealer or if only one dealer has the car you want, you have only one option for a dealer trade-in. But if the car you want is widely available, you have some flexibility and can choose the dealer with the best offer — on both the trade-in and the sale price of the new car. 

The easiest way to get a fair price on your new car and trade-in is to keep the negotiations separate and check each price against online guides.

Close the deal

If you own your car outright, the trade-in process is straightforward: The trade-in value is deducted from the new car price and you pay the remaining amount with cash or an auto loan.

If you own your car, the trade-in process is simple. It’s a little more complicated when you have a car loan.

It’s 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, it is credited to the sale price of the new car.

However, if you’re upside-down on the car loan for your trade-in, meaning you owe more than your car is worth, you’ll have to pay the difference when you trade it in. For example, if your vehicle is valued at $3,500, but you owe $4,000, you’ll need an extra $500.

In this case, you can make a cash payment for the difference, but the dealer will almost certainly suggest rolling the amount you owe — $500 in our example — into your new car loan. This may be convenient, but it means you’ll pay more for the new car and you could quickly become upside-down again. For this reason, NerdWallet generally advises continuing to make payments on your current car until you own it or owe only as much as the car is worth before trading it in.

In situations where you’ve decided to downsize and your trade-in is worth more than the new car you’re buying, the dealership will pay you for the remaining balance. If it doesn’t cut you a check on the spot, get the exact amount in writing to help ensure that you’ll receive full payment.

If you’re applying your trade-in proceeds to another vehicle, you’ll be given a sales contract that lists the trade-in credit. It’s also possible to sell your old car to a dealer without buying a new car. In this case, drop off your car, sign the appropriate documents, and you’ll get a check.

About the author