Q: What is a Trade-In Car?

December 17, 2013 12:53 PM

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When purchasing a new or used car, the buyer makes every attempt to get the best possible price on the desired vehicle. Incentives such as sales or dealer rebates help lower the total cost of the vehicle significantly. Presenting a trade-in car at the time of purchase is arguably the best method of lowering the price of the vehicle.

A trade-in car is a vehicle that you offer to the dealership in exchange for credit toward the price of the automobile that you're purchasing. Generally, a trade-in can be any vehicle that has value, but the amount that you get for the trade-in can vary greatly. Factors that determine the value of your trade-in include the condition of the car, the demand for that particular make and model, and your skill at negotiating a price.

The moment a new car leaves the lot, it begins to lose its value. This loss is known as depreciation, and it continues each year until the car no longer has any resale value. The resale value is the highest amount that you're likely to get when you use your car as a trade-in vehicle. Cars tend to depreciate the fastest during the first five years of ownership, making depreciation one of the biggest expenses of car ownership.

When considering a trade-in, it's important to remember that you're unlikely to receive the Kelly Blue Book listed resale value of your vehicle. There are some exceptions to this, for instance when the vehicle has added value due to its participation in a special event, past ownership, or its rarity.

The key to getting the best trade-in value for your car is in its presentation. All trade-ins are appraised prior to the dealer offering you a price for the vehicle. Making certain that the car is in the best condition possible ensures that you'll get as high a trade-in offer as possible. Visible damage to the automobile should be repaired before offering it as a trade-in. Replace any broken or worn parts that are visible on your car, and clean the vehicle thoroughly inside and out. Avoid major repairs, however, as they are unlikely to be fully recovered by any additional trade-in amount.

Regardless of the car's condition, you should expect to haggle over the trade-in price. The less the dealer can get away with offering you, the greater the profit that the dealer receives on the transaction. You should be wary of attempts to rush you into accepting an offer. Take your time to consider any offer carefully before agreeing to a price. You should also watch out for attempts to devalue the worth of your vehicle through long lists of work needing to be done to the automobile.

A trade-in will save you money off a new or used car purchase, as well as rid you of your existing automobile. Before trading the vehicle in, you should research its resale price to get some idea of how much it should be worth. If the car is in good condition and you handle the negotiation well, you can save thousands off the price of a new vehicle and drive it off the lot that very day.

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