Skip to Main Content

How to trade in your car: 5 simple steps to take

Heavy traffic on a freeway
Andrei Stanescu/Getty Images
Bankrate Logo

Why you can trust Bankrate

While we adhere to strict , this post may contain references to products from our partners. Here's an explanation for .

Trading in your car eliminates much of the work typically associated with selling a vehicle, including creating advertisements, meeting with potential buyers and negotiating the price. The main perk of trading in a car, however, is that it allows you to apply the trade-in value of your old vehicle directly to a new purchase. This can be especially beneficial if you’re financing your next vehicle. These steps can help you make the most of a vehicle trade-in. 

5 steps to trade in your car 

Doing your research and understanding how to navigate the trade-in process can help you maximize the amount your trade-in earns, while also ensuring you are informed and empowered to make the best deal possible. 

1. Find out how much your car is worth 

The first step to trading in your vehicle is to understand exactly how much it is worth. Figuring this number out yourself will help you to feel empowered when it comes time to negotiate and can also increase your chances of getting a fair price.  

Rather than waiting to find out what the dealer thinks, do some research to get a sense of your current car’s value. There are plenty of free online appraisal tools, such as Kelley Blue Book or Edmunds that can help you determine the worth of your car. Don’t just rely on the basic estimate details — make, model, year and mileage. If available, use estimator tools that can offer a deeper sense of the dollars your car will command based on additional car features. 

Value may also be impacted by external factors, according to Kelley Blue Book. If gas prices are high, as they are now, a car that gets better gas mileage might be more in demand than an oversize truck. 

2. Take a look at your bank account 

Trading in a car involves more than assessing the vehicle. You’ll also need to evaluate the state of your finances to know what you can afford on the other side of the trade. 

If you are trading in a car with a loan, determine whether the trade-in value will be enough to pay off the rest of the loan. While the dealer might offer to pay your loan off, you will likely wind up adding that amount to a new loan for your next vehicle. 

3. Ask for offers from multiple dealers 

You don’t have to go to the dealer to start the trade-in process. Instead, you can make dealers come to you with a price. Many online value estimators, such as Kelley Blue Book and TrueCar, are linked to dealers that will extend offers based on the information you share about your car. 

It also may be smart to start your negotiation where you initially got your vehicle. “If the consumer is able to go to the same dealership where he or she purchased the car, he or she may be able to negotiate a better deal since they have a relationship and history with that dealership,” says Meghan Davlin, director of communications at the Illinois Automobile Dealers Association. 

4. Clean your car inside and out 

A cleaner vehicle is more likely to sell. Take the extra time to clean the interior and exterior of your car so that you are showing it in its best condition. 

“Make sure your car is clean and you’re presenting it as you would want to receive it if you were buying it,” says Alain Nana-Sinkam, senior vice president, business development at TrueCar. “Also, if there were small flaws you had planned to fix prior to the trade, make sure to get them done so the car is delivered to the dealer as you had reported and as they are expecting it.” 

Along with freshening up the aesthetics of the vehicle, be sure to have any service record on hand. A nicely maintained vehicle will receive a much better price. 

5. Make an appointment with a dealer 

Car dealerships can be busy places so make an appointment in advance to save yourself time. The dealer will evaluate your car to verify that all the information you submitted online is correct. 

“Ask if you can be present with the appraiser so that you can ask them questions on how they are determining the value of your vehicle,” says Joe McCloskey, president of McCloskey Motors in Colorado Springs, Colorado. “Most dealerships will share this information with you, and having this information will help you to better understand how and why the dealer is valuing your vehicle’s value.” 

Be sure to bring the vehicle registration, the title and all sets of keys. If you don’t have the title because you’re trading in a car that still has a loan, have the lender’s details ready to hand over. 

When to trade in your car 

The key to knowing if it is a good idea to trade in your car is your vehicle’s equity. Your car’s equity is the difference between the amount that you still owe on the vehicle and the current value that it holds. You might be familiar with — and trying to avoid — becoming upside-down on your loan, which is the same as having negative equity.  

It is recommended to not trade in your vehicle if you are upside-down on your loan because you will continue to accrue additional payments. It could end up costing you more if your vehicle’s equity is not in check. 

Pros and cons of trading a vehicle in 

Before you trade your vehicle in, make sure you understand the benefits and drawbacks of selling the vehicle yourself. 

Pros of trading in a car 

The most significant advantage to trading your car in is that it can save you from dealing with the stress and hassle of selling it on your own. Selling a car requires identifying the right price, posting the car for sale where people will see it and dealing with prospective buyers. But when you trade it in, the dealer does a lot of the heavy lifting for you. 

“In most states, there’s also a tax advantage to buying and trading in at a dealership,” Nana-Sinkam says, “because in those states, they only charge tax on the difference between the trade-in value and the new vehicle price instead of paying full tax on the full purchase price of a new vehicle.” 

Finally, trading your car in can simplify the steps between selling your old car and buying a new one. Rather than going multiple places, you can take your old car to the dealership and use the trade-in value as equity toward your new car. 

Cons of trading in a car 

There is one major downside to trading in your car, though: You probably won’t make as much money as you would if you sold the vehicle yourself. The car dealership wants to make a profit by reselling your used car to another driver, so you’ll miss that extra chunk of money. 

Trading your car in might also limit your options when it comes to buying your next car. If you’re planning to use the value of your old vehicle as the down payment on a new one, you’ll have to purchase your next car from a dealer willing to buy the old one. 

Next steps 

Trading in your old car rather than selling it yourself can streamline the process of getting into a new vehicle. There are some key steps you can take to maximize the chances of getting the most money possible for your car. Start by researching the value of your car with free online car estimators and before heading to a dealer, be sure to have your car cleaned inside and out. It’s also a good idea to obtain offers from multiple dealers so you can select the best deal possible. 

Learn more

Written by
David McMillin
Contributing writer
David McMillin is a contributing writer for Bankrate and covers topics like credit cards, mortgages, banking, taxes and travel. David's goal is to help readers figure out how to save more and stress less.
Edited by
Auto loans editor