Get the scoop on steps you can take to sweeten the offer, and when trading in is a better option than selling privately.
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I remember the day I bought my Civic: I felt like Goldilocks after she’d tried Baby Bear’s porridge. But, after driving the car around for a little while, it began to feel less “just right” and more “too big.” My love of the car, however, left me holding onto it until a job change made the payment difficult to maintain. With a heavy heart, I traded it in for a smaller vehicle. But I didn’t do so on a whim. It takes some work to get the maximum trade-in value for your vehicle, but it’s worth the effort.
How does trading in a car work?
The trade-in process is actually pretty simple. You drive to the dealership, where a member of the staff will inspect your car. This typically involves documenting the numbers on the odometer, checking fluid levels and looking for signs of physical damage. When that’s done, the dealership will take a look at your car’s history report. After crunching the numbers, they’ll make you an offer. You can then choose to accept, decline or negotiate for a better offer. Honestly, as long as there isn’t a lien on it, trading in a vehicle is one of the simplest parts of the car-buying process.
Preparing your car for trade-in
Here are a few things you can do to maximize your trade-in offer:
Stay current on your maintenance. Being timely with things like tire rotations, brake jobs and oil changes can extend your car’s lifespan and increase its overall value. If you’re somebody who lives by your car’s maintenance schedule, bring records of all your repairs to the dealership. This can net you an offer that’s about 5% higher.
Get rid of the crazy paint job. You might love those rock-n-roll flames, but they’re not for everybody. If your car sports a custom or neon paint job, the dealership will have to repaint it—and they’re going to charge you for the inconvenience. That’s why it’s usually best to find your own paint shop. Prices for a single coat of paint range between $1,000 and $3,500.
Clean your car, inside and out. A lot of your trade-in’s value comes down to aesthetics. So, give your car a good wash and a wax before you head to the dealership. You should also take some time to vacuum under the seats and clean the mats. Though getting your car detailed can help, it also sends mixed signals to dealers; in other words, make sure that your car is reasonably clean, not hiding-a-dead-body-in-your-trunk clean.
Find out how much you owe. Call your lender to get a payoff estimate and to determine the state of your loan. If you’re “upside-down” on your car loan, it’s really not the time to buy a new car. Rolling negative equity into your new contract just leaves you even further underwater. Pay enough of your old vehicle off to get you in the green before you trade it in.
Do your homework
Taking the time and effort to go through these steps can net you thousands of dollars.
Get an estimate of your car’s value. Skip this step and you risk accepting a lowball offer. To protect yourself from getting bamboozled, use a site like Edmunds or Kelley Blue Book to get a ballpark idea of what your vehicle’s worth.
Gather the paperwork. To make the quoting process easier, you’ll need to come equipped with a dossier. Most dealerships ask you to bring the vehicle title, auto loan payoff numbers, current vehicle registration and all copies of the key. Having these with you will save time and hassle for you and the dealership.
Solicit quotes. Securing multiple estimates will ensure you get the best price. It can also force dealerships into a bidding war for a particularly desirable vehicle. Though you can benefit from getting a few more, I suggest gathering three to five offers before making your final decision. Be sure to try different dealerships as well. The Toyota dealer might not find your Camry as desirable as the used car lot up the street, for example. It doesn’t matter if you end up buying your car there, either! Most dealerships are willing to cut you a cheque either way.
Negotiate the price. Appraisers often start with a lowball offer in hopes that you accept it. This opening salvo usually leaves them with plenty of wiggle room for profitability. If you end up buying from the same dealership that gave you the winning offer, double check that they didn’t alter the sales price of your new car to recoup dollars they lost during the negotiation process.
Close the deal. Now that you’ve come to an agreement, it’s time to seal the deal. If you’re getting credit for your trade-in, make sure that value is clearly listed in your contract.
When you might want to choose a dealer trade-in over other options
Usually, getting the most money for your car means going with a private seller. They don’t have profit margins and overhead to work into their offers. While Car Loans Canada would usually advocate peer-to-peer selling, there are some exceptions to the rule. Here are some reasons you might want to forego Kijiji or Craigslist in favour of Big Bob’s Auto Emporium:
You’re busy. Finding that perfect seller isn’t easy. You’ll have to deal with a lot of hacks, on-the-fencers and lowballers before you find that perfect buyer. You’ll also have to go with each driver on their test drive, pay for a bunch of online ads and schedule your life around selling your car. If this sounds like too much work for a few hundred extra bucks, you’ll want to go with a dealership trade-in.
Stranger danger. While it’s rare, things like carjackings do happen. Though there are steps you can take to ensure your safety, like having someone with you and meeting in a public place, there’s no way to completely eliminate the risk. If your palms get sweaty just thinking about getting in a car with a stranger, consider trading in your vehicle instead.
Your car isn’t perfect. Maybe your car is missing a fender or just doesn’t start. When your car has mechanical or physical issues, you would be better off using it as a trade-in. Private buyers can afford to be picky, and most of them will take advantage of that by offering a much lower price or taking a pass on your vehicle altogether. Dealers, on the other hand, have the resources to repair and resell even the most beat-up cars.
You’re broke. Need a new car but have mothballs in your bank account? Trading in your current vehicle can take the place of a down payment and help lower your monthly payments.
There are special circumstances. Maybe your car’s a rebuild. Perhaps you still owe money on it. In cases like this, it’s best to take your car to the dealership. They know how the buying and selling process works, and they’re knowledgeable of current Canadian car loan rates*.
Jesse Perreault is a vice-president at Car Loans Canada*, an online car loan service that has helped over 1 million Canadians. Car Loans Canada has a mandate of educating car buyers, while offering transparency throughout the loan application process.
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What does the * mean?
If a link has an asterisk (*) at the end of it, that means it's an affiliate link and can sometimes result in a payment to MoneySense which helps our website stay free to our users. It's important to note that our editorial content will never be impacted by these links. We try our best to look at all available products in the market and where a product ranks in our article or whether or not it's included in the first place is never driven by compensation. For more details read our MoneySense Monetization policy.