There are times when shopping for a bigger, better or more fuel-efficient car makes a lot of sense, but you still have decisions to make when it comes to the car you have. In many cases, trading in your car at a dealership is easier and more cost-efficient than trying to sell it on your own. This is especially true if you still have a loan on your current vehicle.
But trading in your car does have its own challenges, and you’ll want to make sure that you get the highest dollar amount in trade-in value you absolutely can. With that in mind, it’s smart to take a few basic steps to boost your car’s trade-in value before you head to the dealership, including fixing mechanical problems, shopping around and watching seasonality.
6 ways to boost car trade-in value
Before taking your car to the dealership, take a few steps to ensure that you get the best deal.
1. Do your homework
The first step before trading in your car is to do some research to find its current trade-in value. Don’t forget that you’ll get less in trade-in value than you would if you sold your car on your own.
“Many people think they are going to get the top value, but dealers taking in the trade need a margin of profit and will offer you less than the trade-in price listed on these sites,” says auto expert Lauren Fix.
2. Take care of known mechanical problems
Remember, the mechanical and physical condition of your car are big drivers of value. As a result, you should take special care to resolve any issues you already know about, and especially ones that are easy to fix.
For example, if there is a warning light on the dash, such as a check engine light, the dealer will assume the worst and bid accordingly, says Chris Brown of RateGenius, an automotive refinancing marketplace. However, you may be able to have this resolved easily by having the car’s major systems reset at a dealership.
Brown also says to check whether your car has any current recalls. If so, you should spend the time taking your car into a local dealership where those can be addressed for free. If you don’t, the dealership may factor in the extra time and energy required when offering you a specific amount of trade-in value for your car.
3. Shop around for trade-in value
Zach Shefska of Your Auto Advocate says that it’s important to “shop around” for trade-in potential while you shop for a new (or new-to-you) car. “Get as many competitive quotes for your trade-in as possible before engaging with the dealer,” he says.
For example, you should get a quote from Carvana, CarMax and any other major used car dealers in your area before discussing your trade-in with the dealer you are going to buy from. Why? Because Carvana and CarMax in particular will offer you a price for your current vehicle whether you buy a new one or not. You can use this price as a baseline for trade-in value and in conjunction with other research you do on pricing.
4. Negotiate trade-in value separately
Brown also says to negotiate different factors of your new(er) car purchase separately. That way, the car salesperson you’re dealing with won’t try to inflate your new car price to make up for a higher trade-in value or offer you a better deal on the new car with less for your trade-in.
By negotiating them separately, you can make sure that you’re getting the best trade-in value possible — or at least what your car is worth — and the best price on the new vehicle you’re buying.
Shefska agrees, advising buyers to watch out for dealerships that will try to combine the two transactions into one deal. They do this because there are more opportunities to generate profits as a dealer if you’re working two transactions at once.
5. Make sure that your car looks its best
Fix points out that a clean and well-maintained car is most likely to get the highest trade-in value. “Clean the vehicle inside and out,” she says. “Detailing the car is like staging a home for resale.”
Meanwhile, you should check to see if you have receipts for repairs and maintenance. These can prove to the dealer or buyer that you took care of the vehicle.
6. Time your trade-in
Also keep in mind that trading in your car may work better some times of the year than others, which could be due to the type of car you have, the weather or some other factor.
For example, financial advisor Matthew Kircher of Fairpoint Wealth Management in Cleveland, Ohio, says that he recently timed his trade-in value based on demand.
Ultimately, he purchased a new 2021 Toyota 4Runner and traded in his old Ford Escape in January of 2021. He was strategic about timing because he knew that all-wheel-drive SUVs would be in high demand during winter and right before the spring college semester.
“We waited until the perfect time to trade in our used vehicle to boost its value,” explains Kircher. “We also timed it perfectly, with the best offers for new vehicles coinciding at the same time.”
Trading in your car is a smart move for many people, but it’s not the right choice for everyone. Remember, trading in your car may not be a fruitful transaction if you owe more than your car is worth.
The Federal Trade Commission (FTC) cautions using a dealership that promises to “pay off your loan no matter how much you owe.” While a dealership might do what it says and pay off your old loan, it’s going to have to make up the difference somewhere — and that “somewhere” will eventually catch up with you.
“Dealers may include the negative equity in consumers’ new car loan,” writes the FTC. “That would increase their monthly payments by adding principal and interest.”
Also keep in mind that negative equity doesn’t just disappear. If you wrap negative equity from your trade-in into your new car loan, you’re more likely to be perpetually underwater on each subsequent car loan.
If you owe more than your car is worth, the FTC recommends postponing your new car purchase so you can pay off more of the loan first. You can also explore the option of selling it by owner so you have the potential to fetch a higher price.
The bottom line
You may not care about your old car at all, but ensuring that you get the best trade-in value can help you get a lower price and monthly payment on the new (or newer) vehicle of your choice.
In the meantime, you should also shop around and compare auto loans. A dealership you’re working with might offer in-house financing, but that doesn’t mean it’s the best deal. In some cases, you get prequalified for an auto loan online with better rates and terms than you can get elsewhere. With a loan approval letter in hand, you’ll be in an even better position to get the best deal you possibly can.