Cars Tips

Car Trade-in Tips: What is it and how can I maximize my car’s value?

When purchasing a new or used car, buyers should make every attempt to get the best possible price on their desired vehicle. Incentives help lower the total cost of the vehicle significantly. Presenting a trade-in car at the time of purchase is arguably the best method of lowering the final price of a new vehicle.


What is a trade-in?

A trade-in car is a vehicle that you offer to the dealership in exchange for credit toward the price of the automobile that you’re purchasing. Generally, a trade-in can be any vehicle that has value, but the amount for the trade-in can vary greatly. Factors that determine the value of your trade-in include the condition of the car, the demand for that particular make and model, and your skill at negotiating a price.

The moment a new car leaves the lot, it begins to lose its value. This loss is known as depreciation. It continues each year until the car no longer has any resale value. The resale value is the highest amount that you’re likely to get using your car as a trade-in. Cars tend to depreciate the fastest during the first five years of ownership, making depreciation one of the biggest expenses of car ownership.

So how does it work?

Your existing vehicle doesn’t lose its value simply because you’ve chosen to purchase another from a car dealer. Your existing vehicle has a “trade-in value” with the dealer, based on the market value of the automobile. This credit can significantly lower the price of your new purchase.

The trade-in value is the amount that a car dealer is willing to offer you toward the purchase price of a new or used car in exchange for your old car. Depending on the quality of your trade-in, the savings can be in the thousands. The lower overall price also means a lower car payment if you’re financing the purchase.

Where does the trade-in value come from?

The trade-in value of the car is based on the market price for that specific vehicle. This market price may be difficult to determine unless your vehicle happens to be in pristine condition. If yours is the rare automobile that has no damage or work needed, then the trade-in value should be slightly less than the Kelley Blue Book Value for your automobile.

The Kelley Blue Book Value is a price for a particular automobile make and model from the largest automotive valuation company in the U.S. Listed automobiles are appraised, and market values assigned. The values are for undamaged vehicles that do not need repairs. These values are the best price a seller is likely to get for such a vehicle if it is sold directly to a consumer.

How much can I expect from my trade-in vehicle?

Most trade-ins won’t obtain top Blue Book Value even if they’re in perfect condition because that price leaves no room for dealer profit on resale. Besides, few used cars qualify for full market price. In avoiding the headaches that go with selling to a private party, the owner of the trade-in will receive an offer below the car’s actual resale value. Typically, it’s minus any estimated repair costs, allowing the dealer to repair and resell the vehicle at a profit.

The trade-in value for most vehicles is negotiable. However, the buyer should know a few things before taking the trade-in vehicle into the dealer for an appraisal.

How can I maximize trade-in value?

To get the best trade-in value possible, the vehicle should look its best. A cleaned and detailed car is worth more at trade-in than a worn and poorly maintained one. You should also make any minor repairs to the car that you can. Fixing windshield damage or minor engine issues before an appraisal by the dealer can net hundreds more on trade-in.

The trade-in value that you receive for your old vehicle can equal instant savings off the purchase of a new car. Using a trade-in lowers monthly payments on a financed automobile. You can apply that value to a more luxurious model or simply add a few more options. Whatever your choice, trading in your existing vehicle is a good way to rid yourself of an old car.

Pro-tip: Check out Kelley Blue Book’s Instant Cash Offer

In addition to providing valuations, Kelley Blue Book offers a tool takes the hassle out of trading-in or selling your old vehicle. KBB’s Instant Cash Offer is a real offer for a specific amount to purchase a consumer’s car or apply the amount towards another car.

The Offer is valid for three days (not counting Sundays) and can be immediately redeemed during business hours at any participating dealer, pending inspection. It is based on specific elements of the consumer’s car, like installed options, specific condition (such as dents and mechanical issues) and local market demand.