Maybe you’ve had your car since college, or your kids are grown and you no longer need the minivan — whatever the case, your trusty vehicle has served you well for years.
But now you have your eye on a set of wheels in the dealership lot, and you’re ready to part ways with your old friend to get it.
Trading it in is not going to get you the highest price. Dealers typically offer below the car’s wholesale price, because they take on the costs of reselling your car. What trading in will do is save you time and energy. Between 40-hour work weeks, kids and that new kickboxing class you’ve been wanting to try, it can feel impossible to carve out enough time to meet up with a slew of buyers to sell your car privately.
But with a little work, you can still get your money’s worth trading in. After you accurately price your trade-in, here’s how to set yourself up to get the best value for your used car.
You have the power
Dealerships love buying good used cars they can turn around and sell, so a savvy car owner holds plenty of negotiating power. Ray Lopez, a former car salesman and author of “Inside the Minds of Car Dealers,” says this is due to the markup on new cars.
“There’s only a 6% to 9% markup on new cars. Most cars hover around 7%. With the discount off of MSRP, there’s not that much profit in selling a new car,” Lopez says. “On the other hand, used cars can have up to a $4,000 markup.”
Dealerships tend to pay more for their own brands, as they find them easier to resell and it helps strengthen brand identity. After all, car buyers at a Ford lot are usually looking to buy a Ford.
Talk to a few dealerships
Visit at least three dealerships to get a range of price offers to compare and provide leverage when it comes time to negotiate. Get all of your offers in writing so you can present them during the negotiation.
When deciding which dealerships to visit, start with online reviews of local dealerships. You may also want to drive by dealerships on a weekend to see if the salespeople are standing outside, waiting for customers. This can be a sign that they will approach car shoppers before they can even browse the lot. Such a higher-pressure sales style can distract you from getting the best trade-in price.
“When talking with dealers,” TrueCar analyst Cari Crane advises, shoppers should present “maintenance records; a lot of dealers look at and appreciate that.” And she recommends being completely transparent about the car’s condition, because you want to create a feeling of mutual trust. For example, you can give them your vehicle history report up front, rather than making them pull it on their own.
Give your car curb appeal
Depending on the type of vehicle you have, it can cost up to $150 to get it detailed, according to CarsDirect, an online automotive site. A thorough wash and vacuum will only set you back about $20. These expenses will pay off later in a higher trade-in valuation from a dealer who is impressed with your immaculate car.
“The shinier it is, the better price you’ll get for it. It could be hundreds more,” Lopez says. “On the other hand, not washing and detailing your car can cost you hundreds, up to about $500, in deductions. Maybe more.”
Vehicle reconditioning companies can also fix dents, cracks and other small flaws to help your car achieve its best trade-in price. Look for a good paintless dent remover; painting your car will actually lower its value. Most are mobile and will fix you car at your home or office.
Beyond interior and exterior cleaning, don’t forget to take out all of your personal items. Clean out your back seat, check the trunk and remove leaves and debris under the hood.
Negotiate the trade-in and new car prices separately
Dealers know car shoppers are usually more focused on getting a new ride than researching and haggling the sale of their old car. One way dealerships take advantage of shoppers’ eagerness is by bundling the trade-in price within the price of the new car. Be careful: They might entice you with an offer above your trade-in value only to hide the fact that they’ve hiked up the price of the new car.
You can avoid this by negotiating the trade-in price separately from the new car price and down payment.
Sales staff may also use a four-square worksheet to juggle prices (and the profit they will make) between the trade-in price, new car price and financing terms. These worksheets can be another way to confuse car buyers, so remind your dealer to break down all the different prices in the transaction clearly outside of the four-square box.
Lopez’s best rule of thumb is that once you and your salesperson have agreed on a trade-in price, ask if the dealership would honor that trade-in price even if you buy the new car from another dealer. “And you want it in writing,” Lopez says. “If he refuses, walk out and don’t look back.”
Close the deal
With an idea of how to get the most for your trade-in, you can take the final steps and make the sale. Negotiate with the dealership to get the value you deserve, and be ready to counter the dealer’s first offer.
According to Lopez, if you balk at the first trade-in offer and the dealer raises the price by $500, you were likely low-balled. If he raises the offer more than $500, he’s trying to get you to pay for it in your new car price.
Do your legwork, negotiate wisely, and you’ll get your money’s worth — and a new car — out of the deal.
Nicole Arata is a staff writer at NerdWallet, a personal finance website. Email: firstname.lastname@example.org.