Buying a new-to-you car can seem overwhelming: Not only do you have to choose among dozens of makes and models but you also have to arrange financing and possibly get rid of your current car. For many people, a trade-in provides a convenient solution to the last task. Maximize how much you might get on your return by following a few key steps:
- Do your homework
Free car appraisal tools on the internet offer a good idea of how much your car may be worth. The key is to check multiple sites and be realistic when evaluating the condition of your vehicle; very few cars actually qualify as “excellent.” And be honest when discussing your trade-in with the dealer: A service evaluation can quickly discover any service needs.
- Know how the market works
Just because an appraisal tool indicates your car is worth $5,000 doesn’t mean you’ll get that amount from a dealer. They may have a surplus of that make and model, for example, and may also have promotions or profit goals that affect any trade-in offers. One tip: To get an idea of the range of offers, visit several dealers, including at least one that is different than your car’s brand.
- Use the trade-in value as a negotiation tool
If you can’t get a dealer to budge on the price of a new car, you might be able to ask them to improve the total value of your trade-in as a lure for getting your business.
- Separate your car trade-in value from your new car
Once you agree on a value for the trade-in, make sure it’s treated as a credit. Then begin negotiating your new-car price separately. This can help reduce the sales tax you pay on your new-car purchase.