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How to trade in your car: 5 simple steps to take Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to help you make better financial decisions by offering interactive tools and financial calculators that provide original and honest content. We also allow you to conduct research and compare information at no cost – so that you can make sound financial decisions. Bankrate has partnerships with issuers, including but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn money The products that appear on this website are provided by companies that pay us. This compensation can affect the way and where products appear on the site, such as the sequence in which they be displayed within the listing categories in the event that they are not permitted by law for our mortgage or home equity products, as well as other products that lend money to homeowners. But this compensation does not influence the information we publish, or the reviews that appear on this website. We do not include the universe of companies or financial deals that could be available to you.

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6 min read Read Published October 11, 2022

The story was written by David McMillin. Written by a contributing writer

David McMillin is a contributing writer for Bankrate and writes about topics such as credit cards, mortgages tax, banking, and travel. David’s goal is to help readers understand how to save money and worry less.

Edited by Rhys Subitch Edited by Auto loans editor

Rhys has been writing and editing for Bankrate since late 2021. They are passionate about helping readers gain confidence to control their finances by providing concise, well-researched and well-structured information that breaks down complicated subjects into digestible pieces.

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Car trading eliminates much of the work of selling a car. The main perk of trading in a car, however, is that it allows you to transfer the value of your trade-in of the vehicle you have traded in directly towards a new purchase. This can be especially beneficial when you’re . These steps will help you make the most of a vehicle trade-in. Five steps to trade-in your car . Conducting research and understanding the best way to navigate the process of trade-in will help you maximize the amount that your trade-in is worth. 1. Find out what the value of your vehicle is. first step in trading in your car is to know what exactly . Finding this information yourself will allow you to feel empowered when it comes time to negotiate, and will also increase your chances of getting a fair price. Instead of waiting to find out what the dealer’s opinion is, do some research to determine your current vehicle’s worth. Tools for appraisals online such as Kelley Blue Book or Edmunds can assist you in determining the worth of your car. If you have them, try using estimator software that gives you an even more accurate estimate of the dollars your car will be worth based on the car’s characteristics that are beyond the make, model and year, as well as mileage. Value may also be impacted by external influences. If the price of gas is high, as they are now, a car that gets better gas mileage might be more sought-after than a large truck. 2. Examine your finances Trading in a car requires more than assessing the vehicle. You’ll also need to evaluate the state of your finances in the event of the transaction. If you’re in the market, consider the trade-in value of your car will be sufficient to pay off the rest of the loan. You can do this by contact your lender to find out the loan’s payoff amount and then comparing the figure with the value of your vehicle’s trade-in. Visit several dealers to ask for quotes for trade-ins and get a firm idea of how the dealers will be willing to offer. Be aware that if a dealer offers to pay your loan off on your behalf, you will likely apply the payoff amount to the new loan to purchase your next car. 3. Request offers from several dealers. You do not need to visit the dealer to begin the process of trading in. Instead, you can make dealers come to you with the price. Numerous value estimators on the internet include Kelley Blue Book and TrueCar are connected to dealers who extend deals based on the details you share about your car. It also may be smart to start with the place you purchased your car. “If the consumer is able to go to the same dealership from which he or she purchased the car, he she may be able to get a better deal because they have a good relationship and past experience with that particular dealer,” says Meghan Davlin director of member engagement and communications at the Illinois Fuel and Retail Association. 4. Clean your car cleaner car is more likely to be sold. Spend the time to clean the interior and exterior of your vehicle so that you are showing the car in its best state to make it easier for buyers “Make sure your car is spotless and you’re showing it in the way you’d like to receive it if you were buying your own,” says Alain Nana-Sinkam the senior vice president of development for businesses at TrueCar. “Also, if there were tiny flaws you intended to address prior to the transaction, ensure that you get them done so your car arrives at the dealer exactly as you declared and the dealer is anticipating it to be.” If you maintain your vehicle well, the car will fetch a more favorable value. Be sure to not pay more to repair the vehicle than you anticipate selling it for. Be sure to have any service documents in your possession. It’s an ideal time to check for any recall notifications for your vehicle. If there are any defective parts that have triggered an recall there could be an increase in safety risks. Most recalls lead to the repairs or the replacement of a car part without cost to the buyer. 5. Set up an appointment with a dealer . Car dealerships are often busy. Make an appointment in advance to save yourself time. The appraiser will inspect your car to verify all information that you provided online is accurate. “Ask whether you are able to attend the appraisal so that you can ask questions about what they’re using to determine what value they will assign to your car,” says Joe McCloskey who is the director of McCloskey Motors in Colorado Springs, Colorado. “Most dealerships will be able to share this information with you and having this information will aid you in understanding what the dealer is doing and how it will be evaluating your vehicle’s worth.” Be sure to bring your vehicle’s registration, the title and the keys in all sets. If you don’t have the title as you’re trading in a vehicle that is still under loan and you’re not sure of the lender’s contact information available to hand over. And remember, you don’t have to accept the first trade-in price a dealer suggests. You are able to negotiate the car’s trade-in value. Dealers generally begin by offering the cheapest price that they can. Inform the dealer that the price appears too low, according to offers from other dealers or the price you’ve found through your research. Negotiating the trade-in price separate with the price for the next vehicle will help to ensure you get the highest value you can for your trade-in. When to trade in your car . The primary factor being able to determine if it’s a good idea to trade in your car is your vehicle’s equity. The equity of your car represents the gap between what you owe on the vehicle and the current value of the vehicle. It’s best to avoid trading within your vehicle in the event that you’re not , which is the same as having . It means you have to pay more on your vehicle loan than the car is currently worth. This is an extremely difficult situation because you’ll still need to pay the loan balance once you have traded in your car. If you are able, keep paying until you are no longer under water. If you need to trade in your car with negative equity, think about buying a less-expensive vehicle to help minimize your loss. Possessing equity that is positive in contrast, is a good spot to be in as it allows you to take the value you earn from the vehicle and apply it towards the cost of purchase of the new vehicle. Pros and pros of trading your vehicle before you trade your car in, make sure you are aware of the advantages and disadvantages of selling the vehicle yourself. Pros of trading in a car The main benefit to trading in your car is that it will free you from the stress and headache of selling the vehicle on your own. requires identifying the right price, posting the car to sell where potential buyers will view it, and negotiating with potential buyers. When you trade in your car and the dealer handles a lot of the work for the buyer. “In most states, there’s also the tax benefit of purchasing and trading in your vehicle at a dealer” Nana-Sinkam states, “because in those states they charge taxes only on the difference between the trade-in price and the new vehicle price instead of paying full tax on the cost of purchasing a new vehicle.” Finally, trading your car in could make it easier to follow the steps of selling your old vehicle and purchasing a new one. Instead of visiting multiple locations, you could simply bring your old vehicle to the dealership and use the value of your trade-in as an equity towards your new vehicle. Cons of trading in a car There is one significant disadvantage when trading your car but you won’t get as much profit than if you had the vehicle sold yourself. The dealership is trying to make a profit by selling your vehicle to a different driver which means you’ll be missing this extra sum of money. Trading your car in might restrict your options when it comes time to purchase the next car. If you’re planning on using what you have earned from your previous vehicle as the down payment for a brand new one then you might want to purchase your new vehicle by a dealer who is willing to buy the old one. The next step is trading in your old car rather than selling it yourself can make it easier to get to a new car. To maximize the money you earn, begin by researching the worth of your vehicle using free online estimators for cars. Before heading to the dealer, you should have your car cleaned both inside and out, and then make cost-effective minor repairs. It’s also a good idea to get offers from multiple dealers. Remember that you have the option of negotiating the cost of trade-in.

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Written by the writer who contributed to the article.

David McMillin is a contributing writer for Bankrate and writes about topics such as mortgages, credit cards and credit cards tax, banking, and travel. David’s goal is to help readers figure out how to save money and worry less.

Editor: Rhys Subitch Edited by Auto loans editor

Rhys has been writing and editing for Bankrate since the end of 2021. They are passionate about helping readers gain confidence to control their finances through providing concise, well-researched, and clear information that breaks down otherwise complex topics into manageable bites.

Auto loans editor

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