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Used Cars

Find out how to get a good deal when trading in your used cars.

Dealerships get their used cars from two sources: auctions and trade-ins. [©Jupiter Images, 2009]
©Jupiter Images, 2009
Dealerships get their used cars from two sources: auctions and trade-ins.

When buying new cars, car owners often choose to trade in their used cars. Trading in a used car can be tricky, because drivers often get less money for a trade-in than they would if they sold the car to a private party. However, trading in a car is the most convenient option for car owners who want to ditch their used car and drive away in a new car on the same day. Savvy car owners realize that they can sometimes get a good deal when trading in their used cars -- if they know what they're doing.

About Trade-Ins

According to DMV.org, many dealerships make a bigger profit on used cars than they do on new ones, which is why they're so interested in trade-ins. The dealerships get their used cars from two sources: auctions and trade-ins. The wholesale price that dealers pay is available in the Kelley Blue Book and the NADA Gold Book. Car owners armed with this information may be able to negotiate a better price for their trade-in.

However, trading in used cars isn't much different from selling them. Dealers will probably not be interested in a car that has little or no resale value or that is dented or worn out. Car owners should expect that the dealership will thoroughly check out the car. A dealership will assess the following:

  • Cosmetic condition of the car
  • How the car has been used and cared for
  • Mileage
  • Overall body of the car

In addition, the dealership will probably run a vehicle history report on the used car's vehicle identification number (VIN) to make sure that the car has not been salvaged or had its odometer rolled back. Other minor issues, such as a poor paint job on a higher-end car, could negatively affect the trade-in value.

How to Trade In Used Cars

Buyers looking to trade in their used cars at a dealership should take several steps in order to maximize their car's trade-in value:

  • First, if the car needs minor repairs, the owner should consider making these repairs before taking the car to a dealer. These repairs should be minor, however. Car owners need to be careful that they don't invest more money and time than they'll get back in the sale.
  • Car owners should wash and thoroughly vacuum their used car before bringing it to a dealer. A thorough detailing job is usually unnecessary.
  • Car owners should also be well versed in their used car's appeal and strong points. For example, if the car has been garage-kept its entire life or if the mileage is low, the owner should stress those points to the dealer. The same holds true if the car make or model is well known for its safety or reliability.
  • During the inspection, the dealer will probably point out any problems with or imperfections in the used car. The owner should let the dealer make his or her case, acknowledge the imperfections and point out that the dealership can make the repairs at a lower cost than the owner can.

Warning Signs

Savvy car owners can usually tell if they're going to get a bad deal on the trade-in value of their used cars. First, anyone planning to trade in a used car should have a very good idea of his or her car's current resale value and wholesale value. Having these numbers in hand can put a car owner in a better position to negotiate a price for his or her used car.

If the dealer offers a car owner a trade-in value that's significantly lower than the actual value of the car, the owner may be able to negotiate either a higher price for the trade-in or a lower price for the new car. This is most likely to happen at the end of a month or at the end of a fiscal year, when car salespeople need to hit a certain number of sales in order to meet their quota. If they're short, they may be more willing to offer a great deal.

Cars.com warns car buyers to be wary of a trade-in price that seems unusually high. While this might initially seem like a good thing, dealers will often increase the price of the new car to make up for the loss on the used car. Buyers should consider asking for the actual cash value of their used cars to assess the overall deal.

In the end, some car owners are able to negotiate a price that's higher than the original quote from the dealer, but less than they would get selling the car on their own. Most people who trade in their used cars feel that the convenience and simplicity is worth the slightly smaller payout.

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