7 Financial Facts To Understand About Trading In Your Vehicle
When purchasing a new vehicle, many people trade in their existing vehicle to the car dealer, rather than going through the hassle of selling the car on their own. As a result, they get the process done much quicker, allowing them to get the vehicle of their dreams as fast as possible. However, when trading in a vehicle, it’s important to have an understanding of the financial facts surrounding the transaction. By doing so, you’ll not only get maximum value for your previous vehicle, but also save money in other areas. To learn why it’s important to know the financial facts beforehand, here are seven tips to keep in mind when you step onto the dealer’s lot.
Know Your Vehicle’s Trade-in Value
Before you ever go to a dealer, always do some research to determine your vehicle’s trade-in value. This can usually be done online, by going to such sites as Edmunds or to the Kelley Blue Book website. In either case, always be honest about your vehicle’s condition when researching its value. Once you’ve gotten the value of your current vehicle, always print out the results and take them with you when purchasing your new vehicle.
Don’t Overestimate Your Car’s Value
When researching your car’s trade-in value, don’t simply find the highest amount and expect to get it from the dealer. Since appraised values are based on averages, some dealers may offer you more for your trade-in, while others a bit less. Rather than spend time haggling over one or two hundred dollars on an older vehicle, put your efforts into negotiating the best price for your new vehicle.
Lower Your New Car Loan
By knowing your car’s trade-in value, you’ll be able to significantly lower the amount of the loan needed to buy your new vehicle. If you have the same information in your hand that the dealer has in theirs, there will be no disputing the value of your trade-in, which will help you financially. And as an added bonus, by lowering the amount of your loan, you’re also lowering the amount of sales tax you’ll pay on the new vehicle.
Since dealers are always anxious to get rid of the previous year’s models late in the year, shopping for a car during this time can help you get more for your trade-in. Many times, dealers will give customers more than their trade-in is worth just to ensure they buy a new vehicle, so use this to your advantage.
Don’t Make Unnecessary Repairs
When trading in a vehicle, many people believe if they make lots of repairs, put on a new set of tires, and give the car a good cleaning, they will get more money from the dealer. This rarely happens, so just do whatever is necessary to get the car to the dealer’s lot in reasonably good condition. Since dealers can do detailing and mechanical work far cheaper than you can, you’ll actually lose money doing this extra work.
By going to several different dealerships and getting estimates for your trade-in, you’ll give yourself bargaining power once you choose a dealer and begin the negotiation process. By having copies of various quotes from other dealers, you’re likely to receive a lower interest rate, more money for your trade-in, and other perks you may have otherwise not received.
Watch for Special Trade-in Promotions
Just like end-of-year deals, many car dealers offer special trade-in promotions during the year, in an effort to get customer to their location. By watching for these, which tend to happen around various holidays, you’ll be able to take the information you have about your vehicle’s value and maximize it as much as possible.
Whether you have a relatively new vehicle to trade in, or instead are eager to unload a decades-old clunker that barely runs, taking the time to do some research on your own can pay off in many ways. From getting more than you expected for your trade-in to saving money on interest and sales tax, you’re sure to get a deal that’s better than you ever expected.