A car is like a house as both are valuable assets, although cars have a faster turnover than homes do. A trade-in presents an opportunity to drive another one after a year or so.
Of course, you want to get the best deal out of this transaction. With foresight and preemptive measures, your next trade-in may be able to fetch a higher value for your car and more money in your pocket than your last one.
Trade-in versus Sale
Generally speaking, a trade-in is a sale. When you sell your car privately, you list it on classifieds, entertain calls or emails from anyone who shows interest, show the car for a test drive, negotiate or haggle, and close the deal. You are also responsible for the paperwork.
The trade-in cuts to the chase and combines the sale and purchase of a new or used vehicle in one transaction essentially. To initiate, you tell the dealership you want to trade in your truck in favor of that Toyota Tundra in the showroom. The dealer will appraise your car and quote you a price.
If you accept the offer, you will get your new car with your old car’s trade-in value going toward the purchase price. You can settle the balance through cash or financing.
In this kind of sale, you only have to work out the details with the dealer, who handles the documentation. You will pay tax for the difference between the purchase price and the trade-in value. For the private sale, you will pay a capital gains tax.
So how to get the best price for your car?
1. Determine Your Car’s True Value
Go to the dealership after you’ve done your homework on your car’s worth. It’s a known industry practice that dealers offer wholesale price or less to account for reconditioning or detailing costs to resell those trade-in cars. To get the closest valuation of your vehicle, answer this quiz about its condition, or fill out this form also from Kelley Blue Book.
In addition to those sources, personally drop by used car and SUV retailers like CarMax to get valuation quotes. Expect to get varying appraisals on the same vehicle as no one holds its exact value. Instead, use those numbers to base your decision to reject, accept, or haggle for a better offer. Also, the appraisal does not include the car’s sentimental value.
2. Do or Defer Repairs? It Depends.
You are thinking of repairing your car’s cosmetic defects to get a higher value for it. You may have to hold it off for now unless you have mechanical damage or damaged components that need immediate attention.
Repairs affect your car’s trade-in value, but their effect on the price may not be as substantial as you’ve hoped. The dealer can recondition or fix flaws on your car for half the price. Always go for regular maintenance, waxing, and detailing, for which you may be able to recoup the cost.
Also, run a recall check on your vehicle by typing your VIN, or vehicle identification number, on the NHTSA’s database. The automaker will shoulder the recall repair costs. It’s best to resolve this issue before you sell the vehicle to the dealer.
3. Mind Your Insurance Claims
Did you file a claim with your car insurance? Any claims will appear on the vehicle history report, which contains documented incidents involving your car, according to Edmunds. Used-car shoppers typically hire Carfax and Autocheck to generate these reports.
The takeaway is that those insurance claims will dent your car’s value. While there’s no other way to go about this expected drop, it’s something to think about when you do your next trade-in. Consider whether it will make more sense to pay for repairs yourself or send the bill over to the insurer and get dings on your report.
4. Maintain Your Vehicle
The dealership knows a well-maintained car and a responsible owner at that. You may be able to get a good or even excellent rating for its condition and get additional dollars to your trade-in value.
Show up in a clean car after having done the following:
- Clear the engine compartment from rags, tools, or any trash. Take care of the leaks.
- Empty your vehicle compartments including your trunk of junk.
- Vacuum your car’s interior.
- Use floor liners or mats to protect your carpeting.
- Fix your cracked windshield.
- Replace burned-out or foggy headlights.
- Check your car’s fluids (e.g., engine oil, windshield wiper fluid, and transmission fluid) and replace with clean ones.
- Go for a tune-up, as needed.
- Invest in appropriate accessories.
You can’t miss the connection between your vehicle’s exterior and the trade-in value as every dent, scratch, ding, and crack leaves a bad mark on the car’s appraisal. Off-roading adventures and large tires can inadvertently damage your vehicle. Toyota Tundra fender flares and those for other trucks SUVs protect the vehicle body from scratches or dents when your tires kick up rocks or road debris.
Also, prepare your paperwork or receipts as proof that you did your part in taking care of the car. You are essentially engaged in selling your car when you do the trade-in. Stage your vehicle for the best price possible.