If you’ve decided it’s time for a new vehicle and you want to trade-in your current one, it’s easy and convenient to do so at the dealership. You simply drive the car to the dealership, have your documentation ready, and you’re ready to say good-bye to your older car and drive away with a new one. Let’s take a look at some of the steps you’ll need to take to get the most out of your trade-in value.
Research The Current Value Of Your Car
Image via Flickr by John Loo
When you buy a new car and drive it off the lot, it begins to depreciate immediately. Using various online trade-in appraisal tools, you can get a fairly clear picture of what the dealer may offer you for a trade-in price.
Once you find the tool you feel comfortable using with companies like Kelley Blue Book or Edmund’s, simply follow the instructions. You’ll enter objective information such as the make, model, trim level, year, and mileage of the car. The guides may ask you about the color of the vehicle and any optional equipment or packages that add extra value to the car.
The next step, the vehicle’s condition, is subjective. You want to honestly state the condition of your vehicle. Each online appraisal tool uses different language such as outstanding, clean, rough, or damaged. Be honest about the car’s condition and try not to over-value it. You’ll feel more comfortable when you bring it into the dealership knowing that they’re going to offer you a fair price based on the condition of the car. Once you have the number generated from the online tool, document it so you have that number as a starting point during negotiations.
Prepare Your Car
If you want to impress the dealership, bring the car in clean and clutter-free. Remove all of your personal belongings and leave items that came with the car such as the jack, spare tire, and original floor mats. If you have any dings or dents, consider having them repaired before you bring the car in.
Have the car professionally cleaned inside and out, and have it waxed so it looks fresh, shiny, and cared for. The more time and money you put into making a good impression of your car, the more potential you have to get a higher trade-in price from the dealership.
Items to Bring to the Dealership
Once your car’s prepped and looking as best it can, take the time to get your documents and necessary items ready. After you and the dealership have agreed upon a fair trade-in price, you can simply hand over the following items to help expedite the process of getting your new car:
- Loan information with the account number and payoff amount.
- Your driver’s license.
- The car’s registration.
- Proof of insurance.
- Maintenance records.
- The car keys, fobs, and remotes.
Trading In Your Car When You Still Owe Money On It
If you’re still making monthly payments on your car, you need to know how much you still owe. Contact your auto loan lender and ask for the payoff price. You’ve already researched the estimated trade-in, so compare what that value is to the payoff amount, and you’ll either have positive or negative equity in the car.
Positive Equity
Positive equity is good. It means that the value of your car is worth more than the amount you owe. When you trade the car in, this positive equity acts as a down payment towards your new vehicle. For example, if you owe $10,000 on the car and the trade-in value is $15,000, you have $5,000 in equity. If the MSRP of the new car you’re buying is $30,000, after trade-in, you’ll only owe $25,000 on it.
Negative Equity
Negative equity means you’re upside-down on the car and it’s worth less than the trade-in value. While dealerships may let you trade-in a vehicle with negative equity, you’re at a disadvantage. You’ll either have to pay the difference of the loan with cash, a third-party loan, or roll it into the new car loan.
For example, if you owe $15,000 on your car and the trade-in value is only $10,000, you have to pay the difference of $5,000 to the dealership. If you’re comfortable with paying the difference for a higher-end vehicle, having negative equity isn’t a bad thing. If you’re having trouble making car payments, you could trade-in the car and buy a less expensive one so that you have comfortable monthly car payments. If you have negative equity in your car, you may want to wait until you gain positive equity to trade it in.
Negotiate The Trade-In Value
Once you have your car’s appraisal or trade-in value, it’s time to head to the dealership and see what they’ll offer you. While you can shop around to several dealerships to see what the best price is, it’s not a bad idea to go to the dealership you plan on buying the new car from. If you get a low offer, you can let them know that you plan on buying a new car from them today. This gives you some leverage as the dealership gets a new car sale and the used car to re-sell.
If you have shopped around several dealerships and keep getting a low offer, then you probably over-valued your vehicle with the online appraisal tool. If you’re not happy with the numbers offered to you, you may need to understand that you over-valued the car, or try to sell the car to a private buyer. Keep in mind, that selling to a private buyer requires lots of time and commitment. Trading in your car with the dealership is convenient, a good way for you to get rid of your old car, and drive home with a new one.
When you’re ready to trade-in your car, our team at Panama City Toyota will offer you a fair price and help you get into a new Toyota. Feel free to contact us so you can drive home with your dream Toyota today.
