If you’re shopping for a new vehicle and your current one is still in pretty good shape, selling or trading it in can help finance your newer model. And, often you can earn a substantial amount of cash for your used vehicle.
According to advice from Edmunds.com, and cold, hard numbers from Kelley Blue Book (see below), both of which are trusted vehicle valuation sources, you should sell privately for the absolute best price. Offers are lower for trade-ins because dealers must invest in getting your vehicle lot-ready, and they’ll want to turn a profit, too. But if you don’t want the hassle of selling privately and choose to trade your current car in, you’re not alone: 48% of all car purchases in 2013 included a trade-in, Edmunds reports.
1. How to Determine a Fair Price for Your Trade-In
Before heading into a dealership (or placing an add in the newspaper or online), you need to have a good understanding of what your car is worth. There are a few ways to conduct your research—you can use an online appraisal tool, from companies like Kelley Blue Book, the National Automobile Dealers Association (NADA), or Edmunds, or you can look at ads to see how others sellers price your car’s make, model, and year.
One of the most important variables that can affect your trade-in price is the condition of your current vehicle. Is it barely running with a patchy (or non-existent) repair and servicing history? Or is it in tip-top shape with neatly filed service records? The answer will really affect how much you can expect to get. KBB breaks down the condition of potential trade-ins (or cars people wish to sell privately) into Excellent, Very Good, Good, and Fair. Of the vehicles they value:
- Just 3% of cars are in Excellent condition
- Excellent condition (for KBB, and for other appraisers with similar condition breakdowns) means the vehicle is in flawless mechanical condition and its appearance is flawless as well.
- 54% are in Good condition and 23% are in Very Good condition
- A car in Good condition might need some servicing, but doesn’t have any mechanical issues, while a car in Very Good condition wouldn’t require any servicing.
- 18% are in Fair condition
- Fair condition describes a vehicle in need of some mechanical repairs with a body and appearance that could use some work, including a worn interior, rust, dents, and tires and wheels that might need repair or replacing.
Price Differences Based on Vehicle Condition:
We looked at trade-in prices for a couple of the most popular makes and models in the U.S.: a Toyota Camry LE 4-Door Sedan and a Honda Accord LX Sedan 4-Door (all prices are for a hypothetical person selling in Austin, Texas in August 2016–prices might vary at different times and elsewhere in the U.S.). We chose Kelley Blue Book for our appraisal tool because some industry insiders argue it tends to cater to dealers a little more than other models, and many dealers use KBB to price trade-ins, so the estimates are likely to be closest to what a dealer might really offer.
Hypothetical #1: 2011 Toyota Camry
The difference in value between a 2011 Toyota Camry LE with 50,000 miles in Excellent condition and one in Fair condition could be up to $2,500 for a dealer trade-in and $1,500 for a private sale. Here’s the breakdown:
|Vehicle Condition||Excellent||Very Good||Good||Fair|
|Average Dealer Trade-In Price||$9,066-$9,667||$8,636||$8,216||$7,714|
Hypothetical #2: 2013 Honda Accord
For a 2013 Honda Accord LX Sedan with 50,000 miles, the difference in price between one in Excellent condition and one in Fair condition could be up to $2,800 for a dealer trade-in and $1,700 for a private sale. The complete breakdown:
|Vehicle Condition||Excellent||Very Good||Good||Fair|
|Average Dealer Trade-In Price||$12,431-$13,053||$12,031-$12,642||$10,931-$12,136||$10,234-$10,820|
2. How to Improve the Condition of Your Car to Raise Your Trade-In Price
As we see, condition has a real dollar impact on trade-in value. Though it might not be possible to turn a clunker into a sale-ready ride, we wondered: if you put a little TLC into your car, can you bump up your asking price? And is it worth the effort and expense?
We tried out KBB’s “condition calculator” and found that fixing the following characteristics could move a vehicle in Good condition up to Very Good condition.
- Fix minor engine leaks: $200-$300 for repairs with a mechanic, or you can perform repairs yourself
- Repair cosmetic defects, like dents and dings: do-it-yourself steps here
- Repair minor scratches and scrapes on wheels: $116 average price, or do it yourself with these video tips
- Provide as many vehicle service records as you can: if you don’t keep a file, you’ll have to hunt them down from wherever you had work done—the more the better
- Ensure all electronics (windows, locks, navigation system) are fully functioning: door window repair can cost about $190
Going from Good condition to Very Good condition could mean as much as $1,700 extra for a trade-in and $500 extra for a private sale, based on KBB’s appraisals. None of these prices are guaranteed, of course, and just because KBB’s online appraisal tool estimates a price your vehicle is worth doesn’t mean a dealership or private party will pay that exact amount.
Carefully consider each repair, and how you plan to sell your car, before investing time or money.
3. How to Prep for Your Trade-In or Sale
- If your car is more than five years old or has more than 75,000 miles, consider selling your car to used car dealers directly, says Real Car Tips. A new car dealer won’t put your vehicle on their lot anyway, most likely, so they would just be acting as a middleman between you and the used car dealer (or auction block).
Get Financially Ready
- If you have a desirable car, negotiate the trade-in price first, before negotiating for your new car.
- Before you begin shopping your car around, find out what your state’s tax advantages are for trade-in vehicles. If you live in a state where you can deduct your trade-in value from the purchase price of your new car, explains Real Car Tips, you’ll only pay taxes on the remaining balance, which could mean big savings. For example: “If your new car costs $25,000 and your trade-in is worth $10,000, you’d pay taxes only on $15,000. If your state charges a tax of 7%, that’s a $700 savings.” Take potential tax savings into account when deciding whether you’ll trade your car in or sell it privately—even a lower dealer price can end up meaning more money for you if the tax savings are high enough.
Prep Your Car—and Yourself—to Head to the Dealership
- Remove personal items and clean the interior and exterior of your vehicle, especially if there are pet, mold, or smoke odors inside. An ozone generator (available at dealers and detail shops) can get rid of hard to remove smells. One caveat: if you want to play your hand close to the vest when visiting dealers (i.e., you don’t want them thinking you will definitely trade your car in and purchase a new one with them that day), you might not want to make your car too clean: clean smells like a sure bet, to some savvy dealers.
- Gather as many service and repair records as you can—including oil changes, tune-ups, and any major repairs or replacements. Available records can have a big influence on what price you’re able to get. If you don’t keep a file (start now), visit your mechanic and see if they have any copies of records they can share with you.
What NOT to Do When You Trade In Your Car
- Don’t make every single repair, pay for detailing and deep cleaning, or any other costly tune-ups without carefully weighing the potential benefit. Run the numbers with an appraisal tool like the one above, or even consult a mechanic for an estimate of certain repairs (but be aware you can be charged for this service).
- Don’t fall for dealership tricks. Car dealerships have been known to engage in shady behavior, from the obvious (ever hear the one about dealers throwing the keys to the car you’re thinking of trading in onto the dealership roof so you can’t leave without buying a new car?) to the more subtle, but equally dubious (some dealerships advertise that they’ll beat popular trade-in offers—like Carmax—by $500, or so, but it’s really just a ploy to get you on their lot).
Good luck and happy shopping!