When most people think about buying a new car, the image that comes to mind is of two tired, haggard people sitting across a desk throwing numbers at each other until they find one that sticks. While it's true that it is important to take the time to negotiate for a good price on your new car, there is one aspect of new car buying that often gets overlooked, and could result in you leaving hundreds, maybe thousands of dollars at the table. And that's your trade-in.
Let's start with the basics - what does it mean to "trade in" your car? Quite simply, trading in your current vehicle means selling it to the dealership, who will then flip the car and sell it themselves. Trading in your current car can provide a big head start towards paying for your new set of wheels. Here are a few things you need to know about trade-ins:
- Do some research to find out the value of your trade-in. Knowing how much your used car is worth before you go to the dealership is very important. There are several different places that can provide you with the value of your new car, but we would suggest using the Black Book Appraisal Guide. Black Book uses numbers from nationwide wholesale car auctions of similar cars to yours to give you an accurate estimate of what you can expect to get for your car.
- If you're upside-down, don't trade in your car! In fact, you may want to reconsider buying a new car at all. Being upside-down on your car means that the worth of your current vehicle, or the amount that you would get for trading it in, is lower than the amount that you still owe on that car. For example, if your vehicle is worth $5,000, but you still owe $7,000 on the loan, then you are upside-down by $2,000. So if you were to trade in that car and buy a new one in this scenario, you would essentially be adding $2,000 (the upside-down amount) to your new car loan, and adding debt onto debt is a dangerous game. It's better to wait until you are right side up and then look into buying a new car.
- Negotiate your trade-in value on its own. The way to ensure you get the best deal on both your new car and your trade-in is to negotiate the two deals separately. Sometimes, the dealer will try to get you to negotiate for your trade-in and the price of your new car together. That way they can do things like offer you a great deal on the new car, but then short you on the trade-in. But if you negotiate the two as separate transactions, you can ensure you're getting the best deal on both.
- Get a car wash! Make sure your car is primped, pretty, and ready for a thorough look over. The dealer will inspect your car and you want to present it in the best light possible. And on that note, be honest about the condition of your car! If you try to slip one by the dealer and they catch it (and they will), it will just cause trouble you don't want.
These tips will help you get the best deal on your trade-in, which in turn helps you get the best deal on your new car. One other thing to consider is that if you trade in your car to a dealership, you will get less money than if you sold the car yourself, so if you have the time to do that it may be an option worth exploring. For more information on trade-ins or selling the car yourself, check out our Trade-In page in the How-To section here at NewCars.com.