Aug 2, 2022
How to know the trade in value of your car
One of the most cost-efficient ways to get a new vehicle is to find the trade in value and put the money towards a new ride. According to a recent study, 45% of car purchases in 2019 included a car trade in.
Car dealerships across Canada are looking for good used cars to resell. Bringing in a well-maintained vehicle can be worth a lot and help you finance your next one. But how can you ensure you are getting the best trade in value?
Learn how you can find how much your car is worth and how you can get the best price for it.
What is trade in value?
Trade-in value is a price a dealer would offer you for a vehicle you are looking to put towards another one at a dealership, or if you want to sell a car in Ontario. The value is aligned with the cost at a wholesale auction (the amount it would sell for at an auction with interested retailers). A dealer may offer a higher amount if the automobile is highly desirable.
How to trade in your car
When you bring a vehicle to the dealership, the value is subtracted from the price of the new one.
It’s important to understand that trading does not always give you the highest profit turnaround. Dealers pay lower prices on trade-ins because they want to turn around and sell it for a decent profit, and depreciation plays a role in the vehicle value. However, trade in is the most convenient way to get rid of your current one and if you are in the market for a new one.
You may want to trade in your vehicle if :
- You don’t want to spend time advertising it.
- The dealership offers to complete the registration and all paperwork involved.
- You want a quick transaction at one dealership, not dealing with multiple potential buyers.
- If you have an active loan on the vehicle, you can roll the balance of the old one into a new loan but be mindful about being over budget.
You may consider selling privately if :
- You want to get a better sale price for it.
- You have an older car that may not get accepted at a dealership.
- You have time to share and post it for sale.
Trading your vehicle in is great if you value convenience over getting the most value. If you prefer more money, consider selling private it and be prepared for extra leg work. Before you sell or trade in your vehicle, ensure you have the used vehicle information package.
How do dealerships determine trade in value?
Dealerships tend to focus on basic transportation needs and finding a budget-friendly vehicle. Many buyers are not interested in paying extra for upgraded packages, so they rarely add value to your trade in or private sale.
Keep in mind there is no such thing as exact pricing regarding trade in value. The amount can change based on the vehicle model, dealers’ inventory, and ability to resell the vehicle. Take the automobile to multiple lots to see what they will give you – it will help you understand the low-end and high-end values.
How to calculate car trade in value
It’s not only the listed price of an automobile that matters – it’s important to know what it sold for. By using a car trade in calculator, you can get a realistic idea of how much your car is worth based on the price that similar models are sold for in your local area.
Before you use the calculator, you will need the following :
- Make, model, year, and trim
- Upgrades or specific features
- Mileage
- Postal code
Once you have that, it’s time to calculate the value. You can use the Kelly Blue Book calculator to get an estimate.
How to check the trade in value of your car
One of the easiest ways to find out the trade value of your car is to check online. Here are some resources to find out your value in the comfort of your home :
- Since 1955, the best-known provider for vehicle value in the automotive industry is Black Book. They provide relevant and accurate vehicle pricing information.
- AutoTRADER has an online tool where you can compare the cost of trading, buying, or selling your automobile.
- KBB (Kelley Blue Book) will help you compare prices on new and used vehicle like a pro. They also have reviews and rating available.
Another option is to bring the vehicle directly to local dealerships and see what they will offer you for the vehicle. You’ll also get a chance to view their current inventory and look at similar models of your car for price comparison.
6 Tips to get the best trade in value for your car
Everyone wants to get the best value for their vehicle. By following these six tips you can improve the amount you’ll be offered when you go to the dealership.
- Car maintenance : Stay up to date with your scheduled car maintenance. Not only does this help the vehicle run better and prevent rust, it is an opportunity to spot potential problems.
- Tidy up : Consider getting it detailed before you get a trade-in value. Fixing minor scratches and flaws can also benefit the value. Remove personal items from the vehicle before you bring it to dealerships.
- Shop around : Along with watching the market, compare the cost of your current automobile from at least three different dealerships and get written quotes. Use the highest amount for the basis of future offers.
- Sales tax : Don’t forget to include the sales tax when you receive an offer. For example, if your trade-in is valued at $5,000 and you buy a $20,000 vehicle, you will pay the tax on $15,000.
- Negotiate : Don’t be afraid to negotiate the trade-in price separately from the new vehicle. To get the best deal, keep the trade-in and purchase negotiations separate and compare each price.
- Review before you sign : After you negotiate, review the contract and confirm you are getting the agreed-upon price.
When you begin to move onto the phase of purchasing your next car, you'll want to check out various auto insurance quotes in your province.
Factors that impact your trade in value
There are a few things that can harm the trade-in of your vehicle. This can include :
- Mileage
- What season or time of year it is
- Year, make, and model
- Exterior and internal condition
- Added features or equipment
Different places will have their own formulas to calculate trade-ins, so be sure to bring your vehicle to a few different dealerships to get a comparison.
Cars with the best trade in value
Depending on your vehicle type, you may have a better experience with trading in. Typically, vehicles will hold their value because they are considered rare, reliable, and durable.
SUVs are known to keep their value better than sedans. Popular models such as the Subaru Forester, Honda CR-V, and Toyota RAV4 do quite well because they are robust and more practical.
Can I trade in my car for a lease?
Although down payments are not necessary when you lease a vehicle, using the money you receive from a trade in can help reduce the monthly payments toward it. However, it won’t save you much on the interest charges. It is not recommended to use trade in cash towards a lease because you’ll have a higher risk of loss if anything happens to the vehicle.
Are trade in value and resale value the same thing?
When you're selling or trading in a vehicle, it's important to understand the difference between the resale value and the trade-in value. The resale value is what your car is worth in the retail market, whether you sell it privately or through a dealership.
On the other hand, the trade-in value is the amount a dealer is willing to pay you when you trade it in for another vehicle.
It's important to note that the trade-in value will almost always be lower than the resale value. This is because the dealer taking in your trade wants to make a profit by selling it to another customer. It's essential to remember this when negotiating the sale or trade-in of your vehicle.
Vehicle trade in FAQs
Yes. If your vehicle is clean when you bring it in for an estimate, a dealer is more likely to offer more money. Would you consider buying a used car that was poorly maintained? Didn’t think so.
Even a vehicle with high kilometres that has been well maintained can be traded in over 100,000 km, but you’ll want to keep it in the five-year mark. More buyers are in the market during the first two quarters of the year. Aim to get your trade-in to dealerships as soon as possible in late winter and spring.
The best mileage to trade in a car is between 80,000 and 120,000km. You'll get the best deal if you can get it in before 100,000 km. But don’t forget a high mileage car that has been maintained properly will get a good price.
Understanding your trade in value determines if it’s worth trading your car in
Many drivers in Canada want to know if it is worth selling a car versus trading it in. If you’re looking to save time and are comfortable with negotiating with a dealership, it is worth trading it in. You’ll be able to get back on the road faster with a trade-in, but you may lose out on some pocket money.
