How Car Dealerships Determine Your Trade-In Value

So much of the financing process takes place behind closed doors that many of our readers are unaware of many important facts about the car buying process, like how dealerships determine the trade-in value of your vehicle. Believe it or not, it’s far from an exact science, which allows for significant room for negotiation.

How to Get the Most for Your Trade-In

Knowing what dealerships look for to determine the value of your trade-in is the best way to ensure you get the most money possible. Here are a few tips that can help:

  • Get the paperwork in order — Have you kept a detailed history of your repair and maintenance history for the vehicle? Being able to show that you’ve consistently made routine maintenance as needed goes a long way.

  • Fix what you can afford — Cheap fixes can end up being worth more than they cost; paintless dent repair, for example, can help spiff up your car and make it look like it’s in good shape. A tune-up can also provide information about the car, and more knowledge with which to negotiate.

  • Know what it’s really worth — Looking up the value of your vehicle in Kelley Blue Book can let you know what your car is actually worth. The dealership will certainly lowball you, but you can get an idea of just how much they’re trying to undercut the value of your trade-in.

  • Negotiate — When you know what your car is worth, you can negotiate. Most drivers don’t bother with their trade-in, and simply being aware of this fact while you are at the dealership can give you all the leverage you need to save hundreds, or even thousands, of dollars.

So, Should I Trade My Vehicle In?

Trading your car in to reduce the price of your new vehicle is one of the most common methods of providing a down-payment, but the fact is that in order for the dealership to actually turn a profit on a trade-in, they have to buy your car from you at less than it’s worth. Almost every time, it’s in your best interest to sell your vehicle, pocket the cash, and apply it to your purchase, but that carries with it the hassle of selling a car.

It’s up to you whether or not you trade in your vehicle, but if you do choose to, remember that you can both negotiate for a better deal or sell your car on your own. Try not to feel pressured to commit to anything the dealership offers unless you’re happy with it.