Best Buy Trade-in Value—The trade-in value is what a dealership will pay you for your car when you exchange it for another. The dealership pays you a fixed amount of money typically used to purchase your new vehicle. It also takes your car away from you and handles all the paperwork.
Your car’s trade-in value is frequently less than what you could receive if you sold it privately. Why? Because the dealership must promote the vehicle, recondition it, and ultimately sell it to another customer—all while turning a profit—which isn’t always the case. They must account for the expenses of getting the car ready for the market. Which may include sending it to a body shop, having it serviced by the service department for anything from a simple oil change to much more involved work, detailing it (some of those trades are pretty dirty; if you have kids or pets, you understand what I mean), taking pictures, and paying for some of the standard business expenses.
Retail Value: What Is It?
The retail value of a vehicle is the price at which a dealership or individual sells it to the general public. This sum includes the cost of the car’s refurbishment, marketing and business expenses, and the dealership’s profit margin.
Because it represents what a buyer is willing to pay for a car that has been prepared, inspected, and supported by a dealership’s reputation, retail value is typically greater than trade-in value.
How Much Is the Best Buy Trade-In Value Worth?
The amount a dealer would provide for a customer’s automobile to be used toward purchasing another vehicle from their inventory is known as the trade-in value. The car’s wholesale value, or what interested merchants would pay at an auction, is more in line with the trade-in value. However, the dealer could offer higher prices if the car is a popular item in the inventory. In this situation, a dealer may account for the transportation and auction costs that would have been incurred had the vehicle been purchased at auction.
Compare prices for trade-in value.
According to Zach Shefska, president and CEO of CarEdge, it’s critical to “shop around” for possible trade-in value for your vehicle. He suggests obtaining as many competitive trade-in quotes as possible before chatting with the dealer.
Obtain quotes from Carvana, CarMax, and any other primary used car dealers in your area before discussing your trade-in with the dealer you plan to buy from. The baseline value of your car can be ascertained using these figures and additional pricing data.
Separately negotiate the purchase price and the car’s trade-in value.
Negotiating your trade-in and buying separately may result in the most excellent price on the new car you’re buying and the best trade-in value. Shefska advises consumers to be wary of dealerships who attempt to bundle the two purchases into a single transaction. They do this because dealing with two transactions simultaneously gives a dealer more chances to make money.
Getting the trade-in offer in writing is also a smart move. This safeguards you against the vendor altering or withdrawing their offer for whatever reason. A formal offer is crucial if you leave the dealership to do more shopping and then return to the same dealer later.
When to Trade-in
There are times of the year when trading in your automobile could be more advantageous than others. Offers you receive may also be impacted by weather and other variables. Matthew Kircher, president and financial adviser of Fairpoint Wealth Management, says he timed his trade-in value according to demand.
In January 2021, he exchanged his old Ford Escape for a 2021 Toyota 4Runner. Knowing that all-wheel-drive SUVs are highly sought-after in the winter, just before the spring term of college, Kircher was astute in his timing. To increase the value of our old car, we waited for the ideal moment to trade it in,” Kircher adds. We also timed it perfectly, as the best deals for new cars were available at the same time.”
Due to often stronger buyer demand, the year’s first two quarters might be a favorable time to trade in a car. To accommodate demand, dealers must have more cars on their lots, which may result in a higher trade-in price.
When you owe money for automobile, you can also trade-in
If you’re still paying for your automobile, trading in might not be the best option. Especially if you owe more than the car is worth. You might wish to put off buying a car for a while or sell it yourself to get a better deal. However, the negative equity does not go away when you trade it in; it will likely transfer to the next auto loan.
When a dealership pledges to “pay off your loan no matter how much you owe.” The Federal Trade Commission (FTC) warns against doing so. Even while the dealership may settle your previous loan. It will still need to make up the difference somewhere, and that “somewhere” will ultimately come up with you.
According to the FTC, “dealers may include the negative equity in consumers’ new car loan.” “That would add principal and interest to their monthly payments.”
Conclusion
Getting the most excellent trade-in value can help you obtain. A lower price and monthly payment on your desired new or used car. Doing your homework, getting many quotations, fixing your vehicle, and making much-needed repairs are worthwhile.
Apply the same research techniques to compare vehicle loans when the time comes to make a purchase. While a dealership may provide in-house financing, it’s not always the best option. You might be able to use the loan offer as leverage when negotiating a price on your next automobile purchase. If you get preapproved online for an auto loan with better conditions.
