Determining a car trade in value can be a confusing and intimidating process for many people, but it doesn’t have to be if you keep these general guidelines in mind.
First, realize that sources like Kelley Blue Book and Edmunds are useful in providing a loose figure for the trade in value of your vehicle, but there are a number of variables that come in to play that these sources do not take into account. Other factors that come into play include whether or not the dealership would want the vehicle you are trading in, how much is owed on the vehicle and how badly they want to sell you the car that you are interested in purchasing.
Most dealerships that sell new or higher-end used cars are not interested in taking on a high mileage trade in. They will likely offer you a low figure, because they will never attempt to sell the vehicle on their own lot. They will take it to the auto auction and get what they can for it. Do not be surprised if they offer you substantially less for a high mileage car than KBB or Edmunds say it is worth. Also consider how desirable the make and model of your car will be to the dealership. If you own an Honda and are looking to purchase a new Mercedes, they may not have much interest in selling your car on their lot. Again, if it is a car that will be taken to auction, they will not give you as much as they would for a car that they would be interested in adding to their own inventory.
Be aware that dealerships will take a trade in that still has a substantial amount remaining on its loan, but this will impact what they are willing to give you for it. If you are expecting a dealership to take over your loan, do not expect to get full book value for the trade in, especially if you are “upside down” in your loan (meaning your remaining loan payments are more than your car is worth).
In addition to using KBB or Edmunds, conduct a search and find out what local dealers are selling cars like yours for. Keep in mind that when a dealer accepts a trade that they plan to sell, they must detail the vehicle, perform a thorough diagnostic check and repair mechanical problems they discover.
Finally, be aware of some traditional dealer tactics. A common practice is for them to conduct their appraisal in front of you, pointing out flaws that will diminish the vehicle’s value in your eyes. If you believe your car is worth more than what they offer, remain firm with your demands. Remember, you ultimately have the power in the negotiations because you can choose to walk away. If you believe that one dealer is lowballing you and won’t budge, take your vehicle to another location and have them conduct an appraisal. This should give you an indication of whether the other offer was fair or not. On the other hand, realize that the deal must be reasonable to them. If you want to buy their car for less than the sticker price, don’t be surprised that they want to give you less than the book value for your trade in.
Keep these things in mind when negotiating a trade in.