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Understanding trade-in value
Don't sell your old car short. Doing your homework around how trade-in values are worked out is key to making sure you're walking out of your local dealership with the best deal possible. Let's take a look at how trade-in value is calculated.
In this case, first impressions do matter; if your car is looking fresh after a new paint job, wash, and interior steam-clean, you're likely to get a better trade-in price at your dealership. Likewise if your car has lower mileage, smooth brakes, working headlights, fresh tires and other hallmarks of a well-maintained car. These little things all add up to better trade-in value.
How to work out your car's trade-in value
When it comes to vehicle valuations, it's best to lean on expert advice.
Take Kelley Blue Book, recognised as a trusted automotive research source for over 90 years. KBB's website hosts around 20 million unique visitors a month, and offers quick and simple vehicle valuations by letting you enter information like your car's age, model, brand, mileage, condition, and more. They also take the cosmetic and mechanical condition of your car (like we mentioned earlier) into consideration.
Without offering guarantees on your vehicle's value, these sites can give you a ballpark figure to work with when negotiating a price at your local dealership. With a new estimation in your locker, you have the potential to start the negotiations at a dollar figure higher than if you walked into the dealership cold.
Can you trade-in a car with negative equity?
Once you've worked out your current car's value, your next step is to look at its equity.
When buying a new car, many people will own older cars that they still owe money on. Sometimes this means their current car has a value that's actually less than the amount they've paid off - that's called negative equity.
Negative equity can present a bit of a challenge when it comes to starting the trade-in process. But don't worry, there are many ways dealerships can help their customers manage all sorts of financial circumstances. Dealers may also look at your entire equity picture and, in some cases, could even roll negative equity into your new vehicle purchase. While that will make the total cost of the new car a bit more, it also gives you a chance to spread paying it off over the course of your new loan!
Making the trade at a local dealership
After you've worked out your car's trade-in value, assessed its equity situation, and are sure you want to make the trade, your next step is a trip to your local dealership.
The dealership will carry out an inspection of your car to work out the trade-in value they're willing to offer. With this in mind, it's vital you clean and service your car before this inspection, to iron out smaller problems that may knock some value off of your appraisal.
Come prepared to negotiate the best price possible for your trade-in. Once you've settled on a price that works for both parties, you're ready to close the deal!
Remember: if you're buying a new car from the dealership and getting credit on its trade-in value, double-check this is included in your contract and that the right amount has been deducted from the cost of your new vehicle.
And with that, you're good to go! Enjoy driving away in your new car after saving as much as possible, thanks to a great trade-in appraisal.