10 Useful Tips on Trading in Your Vehicle

vehicle

When car owners are in the market to buy a brand new vehicle, they usually want to sell their existing vehicle.

They can sell it privately, which requires risk, patience, and some legwork or they can trade it into a new car dealership. A trade-in refers to any vehicle that a car buyer intends to sell to the dealership as part of a deal in acquiring another vehicle (new or used).

The benefits of a trade in (as opposed to selling in private) are the efficiency and convenience of buying and selling at one location, where you may already have a relationship, and significant tax savings.

The actual sales process and completing a purchase can be handled promptly – even within a couple of days. Many busy consumers like the idea of choosing a brand new car at the same place and dropping off their vehicle that is older.

The other benefit is the tax savings. The value of a trade-in is deducted from the selling price of the car you’re purchasing. This reduces the taxable portion that must be paid on the new vehicle.

Let’s say you want to buy a brand new car worth $40,000, and your trade in is appraised at $20,000. That $20,000 is applied toward the price of the new automobile, effectively reducing the selling price to $20,000.

In this scenario, the customer would pay tax on $20,000 ($2,600), as opposed to $40,000 ($5,200), a savings of $2,600.

Another consideration when trading in a vehicle is the cost. Here are 10 useful tips to ensure that you get top dollar for your trade-in.

  1. Realize that a dealer will pay top dollar on a wholesale level, but not on a retail level. That’s because there are costs incurred by the dealer on all trades, reconditioning, such as vehicle inspections, advertising, and sales commissions.

  2. Study the market. You will be given a fair approximation of the worth of your auto by vehicle websites that are used. Canadian Black Book is considered the industry benchmark for providing market values for cars, trucks, and SUVs on the wholesale level.

  3. Be realistic. Optimal prices are based on vehicles in immaculate condition, and few vehicles meet that standard. Knowing the actual market value of your vehicle will give you leverage when negotiating.

  4. Make the auto presentable. Vacuum the floors and trunk, and remove any dirt and debris from interior surfaces, for example, dashboard, seats and door panels. Fix obvious damages, for example, worn out tires, a cracked windshield or broken headlights. Repair any dents and dings in the car’s exterior.

  5. Gather all service records. If you can prove that you have taken care of your vehicle with recommended service maintenance, it will command a higher price (either at a car dealer or privately).

  6. Be honest about the auto’s true condition. It doesn’t pay to lie or mislead the buyer; the truth about the auto will soon be revealed in time. Dealers use the CarProof services to verify a vehicle’s history.

  7. After your car has been appraised don’t remove or replace any parts or accessories. To do this is unethical and just plain wrong.

  8. Determine the current market demand for your make and model, and whether the dealership is overstocked for that model. Supply and demand and market conditions will affect how much a car dealer is willing to pay.

  9. In the event you are driving an older model vehicle that is on its last legs, figure out if there are any “clunker” programs offered by the manufacturer. Sometimes a manufacturer will offer a minimum trade-in allowance (approx. $3,000) on these older vehicles.

  10. Remove any personal items before delivering the vehicle to the dealership. Check the glove compartment, underneath seats and in trunks.