What’s The Trade-In Value For My Car?

December 28, 2023

When the time comes to bid farewell to your trusty automotive companion, one of the most pressing questions that arises is, “What’s the trade-in value for my car?”. Whether you’re looking to upgrade to a newer model or simply seeking to sell your vehicle, understanding its trade-in value is crucial in ensuring you get the best possible deal.

This value is influenced by a myriad of factors, including the car’s make, model, age, mileage, condition, and current market demand. In this article, we will explain the intricacies of the trade-in process, offering expert insights and practical advice to help you navigate the often murky waters of car valuation.

With the right knowledge in hand, you can confidently approach dealerships and private buyers, armed with the information needed to negotiate a fair and satisfying exchange for your beloved vehicle.

What Does Trade-In Value Mean?

Trade-in value refers to the amount that a car dealership is willing to offer you for your old car, which will be used as a credit towards the purchase of a new or used car from their lot.

This value is determined by various factors such as the age, mileage, condition, and market demand of your old car.

The advantage of trading in your car is that it can significantly lower the cost of your next vehicle. For instance. If the dealership offers you a trade-in value of $5,000 for your old car and the car you want to buy is priced at $20,000. You would only need to finance $15,000, making your car payments cheaper.

Notably, the trade-in value may not always reflect the full market value of your car, as dealerships need to account for the costs of reconditioning and reselling your vehicle.

So, it’s always recommended to do your own research and understand the fair market value of your car before negotiating a trade-in value with a dealership.

Factors That Determine Trade-In Value

1. Age

Cars generally lose value rapidly, with a significant drop occurring in the first year. As a rule of thumb, they can lose 20-30% of their value within the first year and 60% or more of the original price after five years.

While the curve flattens out after that, its value will continue to decrease unless your car becomes collectible or classic. Newer trade-ins typically fetch higher prices and yield bigger profits for the dealer.

2. Impression At The Trade-In Time

Making a good impression at trade-in time is crucial. Ensure your car is thoroughly cleaned, vacuumed, and free of personal items. Consider a full detailing of the exterior, interior, and engine bay to convey that the car has been well cared for.

The attention to detail can potentially increase the trade-in value and positively impact the offer you receive from the dealer.

3. Demand In The Market

Beyond the specific factors mentioned above, overall demand for certain models and features can also impact the trade-in value.

Factors such as the popularity of a certain paint colour, the performance of a particular model in the market, or the demand for specific features can influence the price dealers to offer.

Factors like climate preferences, gas mileage, and regional market conditions also play a role in determining the value of a trade-in.

4. Mileage

Low mileage can work in favour of an older trade-in. The average number of miles driven in the United States is around 13,500 annually. If your car has a significantly below-average mileage, it becomes an attractive selling point for the dealer.

For example, a 10-year-old car with only 100,000 kilometres (half the national average) may appeal more to potential buyers than one with 200,000 kilometres on the clock or more.

5. Condition

Regardless of age or mileage, the condition of your car plays a crucial role in determining its trade-in value. Dealers consider factors such as scratches, dents, stained interiors, cracked windshields, and mechanical issues.

These factors affect the cost of repairs or replacements needed before the car can be sold at a higher price. Dealers may deduct these costs from the trade-in offer, so maintaining your car’s condition is essential.

6. Equipment In Your Car

The inclusion of standard and optional equipment in your car can boost its trade-in value. As the number of people skilled in driving manual cars decreases, automatic transmission is highly sought after.

Upgrades like premium audio systems, automatic climate control, power seats, enhanced upholstery, and sunroofs can also elevate the value. In colder climates, features such as all-wheel drive, heated seats, and steering wheels hold more significance, while regions with higher fuel prices prioritize fuel efficiency.

7. History Of Your Car Maintenance

Keeping up with the manufacturer’s recommended maintenance schedule and retaining the paperwork from each visit can enhance your chances of obtaining the highest trade-in value.

Providing documented proof of proper maintenance demonstrates that your car has received the care it deserves. Some dealers prefer to see that the maintenance was done in their service department, as it can help sell your trade-in and establish you as a potential loyal customer.

What Documents Do You Need To Bring When Trading In Your Car?

Proof of Car Insurance

This card provides proof of insurance coverage for the vehicle. Most states require vehicles to be insured, so dealerships will want to see this document to confirm that the vehicle has been properly insured.

Vehicle Title

The title is a legal document that proves you own the vehicle. It includes information about the vehicle and its history. If there’s a lien on the vehicle (i.e., if you’re still paying off a car loan), the lienholder’s information will be on the title. You’ll need to pay off the lien before you can transfer the title to the dealership.

Vehicle Registration

This document verifies that your vehicle is registered in your name and that the registration is current. Dealerships need this to confirm that the vehicle is legally roadworthy and that all fees associated with the vehicle have been paid.

Driver’s License

Your driver’s license serves as a form of identification. The dealership needs to verify that you are who you say you are before they proceed with the transaction.

Maintenance Records/Receipts

These documents show the care you’ve taken in maintaining your vehicle. It includes records of routine maintenance like oil changes, tyre rotations, brake jobs, and any repairs or upgrades. They can demonstrate the vehicle’s condition and reliability, potentially increasing its trade-in value.

Auto Loan Information

If you’re still making payments on the vehicle, you’ll need to provide information about your loan. This can include a payoff statement from your lender, which shows how much you still owe on the loan. The dealership will use this information to pay off the remaining balance on your loan as part of the trade-in process.

Vehicle Keys and Manuals

Bring all sets of car keys, remotes, and the owner’s manual if you have them. These items can affect your car’s trade-in value. If they’re missing, the dealership might offer you less for your vehicle because they’ll need to replace them.

Terms And Values Used When Using Online Tools

Trade-In Value

Online tools use this value as a baseline for determining the worth of your car if you were to trade it in at a dealership. The trade-in value is typically the lowest, based on the dealer’s assessment of your vehicle’s condition and their estimation of what they can sell it for.

Private Party Resale Value

His value represents the amount you could expect to receive if you sell your car directly to a private buyer. Online tools consider the current condition of your vehicle and comparable vehicles in the local market, which can cause this value to fluctuate.

Dealer Retail Value

This is the price a dealer would likely ask for your car after making any necessary repairs or modifications. Online tools factor in this value, which includes a profit margin for the dealer.

Certified Pre-Owned Value

This value is for vehicles inspected by third-party inspectors and comes with additional guarantees and benefits, such as a factory warranty. Given these added assurances and the certification cost, the certified pre-owned value is typically the highest valuation for a used car.

Popular Methods To Determine Car’s Trade-In Value

1. Kelley Blue Book (KBB)

As an industry-leading automotive research company, KBB offers a comprehensive vehicle valuation tool. It leverages historical transaction data and considers factors such as the vehicle’s make, model, year, condition, and other features. However, it’s important to note that KBB’s pricing information may lag, and it can potentially overestimate the value of a vehicle.

2. Edmunds’ Appraisal Tool

Edmunds’ tool offers a detailed appraisal of a car’s value based on its make, model, year, mileage, overall condition, and region. It contrasts with KBB by providing a more current market-driven estimate. Edmunds’ True Market Value (TMV) tool considers actual transactions and adjusts for local market conditions and seasonal trends.

3. Australian Auto Dealers Association

Representing over 3,179 car dealerships, NADA provides data on automotive industry trends and vehicle values. AADA’s valuation leans more towards the vehicle’s wholesale price and assumes the car is in good condition, which could result in a higher estimated value.

How To Increase Your Car’s Trade-In Value

1. Do Your Job

Knowledge is power when it comes to trading in your car. Begin by researching the current market value of your vehicle using online tools like Kelley Blue Book, Edmunds, or AADA.

These resources consider factors like your car’s make, model, year, mileage, and overall condition to give you an estimated value. Also, familiarize yourself with the demand for your specific car model in the market. If your car is in high demand, you’ll likely get a better trade-in offer.

2. Take Care Of The Unknown Mechanical Problems

A car with mechanical issues is less appealing to dealers as it represents a potential cost. Therefore, before bringing your car in for a trade-in, fix any known mechanical problems. If you’re unsure about the mechanical state of your car, consider having it inspected by a trusted mechanic. They can point out potential issues affecting your trade-in value, which you can address accordingly.

3. Ensure It Looks Its Best

The appearance of your car can greatly influence its trade-in value. A clean, well-maintained car gives the impression that it has been well cared for, which could lead to a higher trade-in offer.

Consider investing in professional detailing services to clean your car thoroughly, both inside and out. Also, attend to minor cosmetic issues like dents, scratches, or chipped paint. A car that looks good is more likely to fetch a higher trade-in value.

4. Shop Around For Trade-In Value

Trade-in prices can vary significantly from one dealership to another. This variation can be due to several factors. These factors may include the dealership’s current inventory, demand for your car model, and the dealership’s business model.

So, it’s worth visiting several dealerships and getting multiple trade-in offers. This allows you to compare offers and choose the one that gives you the best value.

5. Negotiate Trade-In Value Separately

If you’re trading in your old car while purchasing a new one, negotiate the trade-in value separately from the price of the new car. Dealerships often try to bundle the two transactions together.

This can make it harder for you to determine if you’re getting a fair deal on your trade-in. Negotiating these transactions separately ensures you get the best possible value for your trade-in and the best price for your new car.

6. Time Your Trade-In

The timing of your trade-in can also greatly impact its value. For instance, convertibles fetch higher prices in the spring and summer months. The 4x4s or SUVs are more in demand during winter.

Also, dealers may offer lower trade-in values if your car model is about to be discontinued or a new model is about to be released. Therefore, keep an eye on market trends and time your trade-in strategically to maximize its value.

Frequently Asked Questions

1. What Is A Car’s Trade-In Value?

A car’s trade-in value refers to the amount of money a dealership offers you for your used vehicle, which will be put towards purchasing a new or used car from their lot. This value is determined by various factors.

These factors include the car’s age, mileage, overall condition, market demand, and whether the dealership believes it can sell the car for a profit. The goal of trading in a car is often to reduce the out-of-pocket cost for the next car purchase.

2. Are Online Trade-In Value Calculators Accurate?

Online trade-in value calculators, such as those provided by Kelley Blue Book, Edmunds, or Black Book, offer a useful starting point to estimate the trade-in value of your car. These tools use extensive data and complex algorithms to provide a ballpark figure based on factors such as make, model, age, mileage, and overall car condition.

However, it’s important to understand that these calculators provide an estimate, not an exact figure. The actual trade-in offer you receive from a dealership may differ. This is because dealerships also consider local market conditions, current inventory, demand for your specific car model, and the potential to resell the car when determining your car’s trade-in value.

3. Can I Negotiate My Car’s Trade-In Value With A Dealer?

Yes, you can negotiate your car’s trade-in value with a dealer. Dealers typically start with a lower trade-in offer, expecting that there will be some negotiation involved. It’s important to remember that the first price a dealer gives isn’t necessarily their final offer.

Therefore, it’s in your best interest to know your car’s approximate market value and be prepared to negotiate for a better price.

4. Does The Color Of My Car Affect Its Trade-In Value?

Yes, the colour of your car can affect its trade-in value. According to research from iSeeCars.com and other sources, certain colours may hold their value better in the resale market than others. Coloured cars, such as yellow or orange, tend to retain their value well, likely due to their rarity.

On the other hand, common colours like black, silver, and white – while popular with new car buyers – may depreciate more quickly. This could be due to the higher availability of these colours in the used car market, making them less rare and potentially less valuable.

5. Does My Car’s Trade-In Value Affect How Much I Can Get For A Loan?

Yes, your car’s trade-in value can affect how much you can get for a loan. When you trade in a car, the trade-in value is typically applied as a credit towards your new car purchase. This means that the higher the trade-in value of your old car, the less you will need to borrow for your new car.

However, things can get more complicated if you still owe money on your current car loan. If your car’s trade-in value is less than what you owe, this is known as being “upside down” or “underwater” on your loan. In this case, the difference (negative equity) could be rolled into your new car loan, increasing the amount you owe.

Conversely, if your car’s trade-in value is more than what you owe on your current loan, the surplus can be used as a down payment on your new car, reducing the amount you’d need to borrow.

6. How Often Does A Car’s Trade-In Value Change?

A car’s trade-in value changes frequently due to various factors, including depreciation, mileage, age, and market demand. According to the sources, a new car can depreciate by 20-30% in its first year and lose 60% or more of its original price after five years.

7. Can I Trade In My Car If It’s Not Fully Paid Off?

Yes, you can trade in your car even if it’s not fully paid off. However, it’s important to understand that the loan on your vehicle doesn’t disappear just because you’ve traded it in. If you owe more on the loan than your car is worth, this is referred to as being “upside down” or “underwater” on your loan.

Conclusion

The road to learning about car trade-in prices teaches us that to know what your car is worth, you need to do your homework, understand a lot, and pay close attention to details. But don’t forget, you don’t have to figure it all out by yourself.

This is where Mad Man Motors’ buying centre (I Want Your Motor) comes into the picture. An established name in the car trade-in industry, Mad Man Motors in Wangara is backed by 15 years of car dealership experience. We don’t just deal in cars; we specialize in opportunities. Opportunities for you to unlock the hidden value of your car, and turn it into a financial advantage.

With our vast experience and deep understanding of the market, we are committed to ensuring you get your vehicle’s best trade-in value. Our team of dedicated professionals takes the time to understand your needs, evaluate your car accurately, and provide a fair and competitive offer.

So, why wait? Unearth the treasure that’s been sitting in your driveway. Take that first exciting step towards understanding the true value of your car. With Mad Man Motors by your side, you can turn this thrilling quest into a rewarding experience.