If you’re a consumer, selling your used car to a dealer for credit towards the purchase of a new vehicle is considered a “trade-in.” This section is designed to provide you with information about trade-ins, including the advantages and disadvantages associated with the vehicle trade-in process as well as the steps involved with preparing your car for trade.
To begin, when you trade-in your vehicle, you don’t need to worry about advertising the car to prospective buyers, including writing an ad, posting an ad in a print or online publication, or paying for the ad once its posted.
Additionally, you don’t have to entertain a host of prospective buyers by fielding inquiries, setting appointments, showing the vehicle or taking test-drives.
Finally, the process involved with transferring credit of your trade-in towards the purchase of another car is relatively easy. Additionally, the dealership handles the bulk of the credit, transfer and sale documentation, and in most cases, all that’s required from you is your signature on the paperwork.
As we mentioned in earlier sections, when you sell your car to a private party, you stand to make more money on the deal and, ultimately, more profit.
When you trade-in your vehicle, however, you typically end up getting less money for your vehicle than you would if you sold it outright. This lower value is directly related to the costs the dealer incurs for flooring, advertising, transporting and selling the vehicle. As a result, the dealer pays less money for the car in an effort to cover the potential costs associated with reselling it.
Preparing your Car for Trade
In our Preparing your Car for Sale section, we offer a detailed overview of the steps involved with preparing your car for resale. These same rules apply to the trade-in process as well. Let’s look at a few of the pointers outlined in our earlier section.
Detail Your Car
When it comes to selling your used car, think clean. A dealer is going to appreciate (and will potentially pay more) for a car that looks good, one that’s shiny and clean on the outside and one that smells good and looks good on the inside. Most importantly, a dealer will see that you care about the car and have kept it in good condition, a psychological element that’s extremely important in any successful used car sale.
To begin, be sure to wash and wax the exterior. There are a variety of products on the market designed to bring your car’s paint back to a shiny luster, including paint restorers that remove oxidation and return color. If you’d like, you can employ the services of a professional detailer who can buff the paint to bring it back to top condition as well as full-service car washes that provide a variety of car detailing services in addition to your typical cleaning and waxing. Don’t forget to wash the wheels thoroughly and use a dressing on the tires to restore sheen. Be sure to clean the windows inside and out and polish the chrome. A good waxing can increase your car’s value by hundreds of dollars. If you have a little bit of extra money, a comprehensive professional detailing can enhance your car’s exterior significantly and, at the end of the day, you might just end up making more money from the trade-in as a result.
Next, pop open the hood and take a look at the engine. If it’s dirty, greasy or coated with grime, spray on engine degreaser and hose the motor clean on the topside and the underside if possible. There are a variety of degreasers available on the market for purchase. Battery deposits can be cleaned with a solution of baking soda and water. Put yourself in the dealer’s shoes – an engine that looks clean gives the impression the car has received plenty of TLC under the hood during its lifetime.
While you’ve got the engine in your sights, now is a good time to top off important fluids such as the oil, coolants, steering, brake and transmission fluids. You might also consider having the oil and the coolants changed if you haven’t done so in a while.
Your car’s interior appearance is just as important as the way it looks on the outside. You can start by wiping down all inside surfaces with a quality cleaner. Be sure to vacuum the upholstery, including the carpets and the mats and spot clean any dirt or food particles that might be stuck to the fabric. If the interior smells like your pets, cigarette smoke or mildew, a good air freshener might be just the ticket to give it an appealing smell. Make sure the windows are clean on the inside as well as the outside, and use a dressing on the dashboard and any other vinyl components to return luster. If there are cigarette burns, rips or tears in the seats, you might consider purchasing some attractive, snug-fitting seat covers or making minor repairs to the upholstery to bring it back to its original condition. And don’t forget to clean out the trunk, the glove box and any other storage compartments. Again, there are a variety of detailing services available on the market if you don’t have the time or the energy to do it yourself.
Repair Your Car
When it comes to making repairs to your used car, you need to determine whether or not the repairs will actually increase the value of the vehicle at resale time. Most importantly, you need to determine if you’ll be able to increase the selling price of the car enough to recoup the cost of those repairs. When it comes to safety or emissions requirements, we suggest you have a certified mechanic inspect the vehicle and make sure it meets or exceeds state requirements to make the vehicle roadworthy. Your car may also need repairs to make it operate properly. In this instance, we suggest you fix the vehicle to ensure it functions correctly before you sell it.
Organize Your Records
Now’s the time to collect and organize your maintenance records, if you’ve kept track of the service your vehicle has received during the time you owned it. Any and all fluid changes, tire rotations, paint or body repairs, engine repairs and service and any other related maintenance documentation is important to have because it demonstrates to a dealer the care the vehicle has received during the time you owned it. If your car has been serviced at a dealership, you can call that particular dealer and ask for a copy of the service history. We also suggest you obtain a detailed vehicle history report about your car based on its VIN number (the car’s vehicle identification number) as back-up documentation about the validity of the vehicle’s title and mileage as well as other important historical information.
Get a Value
To begin, you need to research the vehicle’s trade-in value or low retail value (depending on the year of your car) by inputting the make, model, year and mileage information at the NADAguides.com Used Car Information Center. Once you’ve inputted this information, you’ll be provided with a value report outlining several different valuations, including their descriptions.
The range of values listed on the NADAguides.com vehicle value report is directly related to the year of your car. Late model used vehicles are provided with two values – average trade-in and average retail. Depending on your vehicle’s particular characteristics, including its condition and mileage, you can expect to receive a price that’s close to the NADAguides.com average trade-in value.
Older used cars are provided with three values – low, average and high retail. Again, depending on your vehicle’s particular characteristics, including its condition and mileage, you can expect to receive a price that’s close to the NADAguides.com low retail value. Following is a complete description of what each of these valuation criteria mean, taken directly from the NADAguides.com used car-pricing report.
An average trade-in vehicle should be clean and without glaring defects. Tires and glass should be in good condition. The paint should match and have a good finish. The interior should have wear in relation to the age of the vehicle. Carpet and seat upholstery should be clean and all power options should work. The mileage should be within the acceptable range for the model year. The “average trade-in” value is a national average calculated from the Official Used Car Guide’s ten regions. The “average trade-in” value for your vehicle could be higher or lower than the national average due to your local market conditions.
Low Retail Value
A low retail vehicle may have extensively visible wear and tear. The body may have dents and other blemishes. The buyer can expect to invest in bodywork and/or mechanical work. It is likely that the seats and carpets will have visible wear. The vehicle should be able to pass local inspection standards and be in safe running condition. Low retail vehicles usually are not found on dealer lots.
Once you’ve determined your car’s value by inputting its make, model, year and mileage information and by choosing which condition criteria most closely matches your specific car, and once you’ve prepared your car for the trade-in process by detailing it, making any necessary repairs and organizing your maintenance and service records, it’s time to enter into the dealer trade-in process.
For many people, trading-in their vehicle, letting the dealership handle the DMV documentation and using the money as credit towards the purchase of another vehicle, is a much more convenient, hassle-free approach to the used car sales process than a private party sale. At the end of the day, it’s up to you to determine which process is best for you.
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