If you own a used car that you want to ditch, the most obvious thing to do is put it up for sale. However, if you don’t want to deal with the hassle of posting a for-sale ad, meeting potential buyers or worrying about receiving your payment, you can always trade your car in at a dealership and put the value towards a replacement.
There are benefits and detriments to both methods, but the general consensus among many car owners is that trading in a car is less profitable than selling one privately. While this is true in plenty of cases, it is possible to make significant gains from a trade-in, while preserving the essence of what makes it worthwhile in the first place – its hassle-free nature.
Here are a few ways to help you get the most value for your old car:
Vehicle Value Appraisal Tools
There are only two ways for a dealer to obtain a used car – either from you via a trade-in or at auction. This means that the less money they can pay you, the more profit they can earn from their future buyers. That’s why you should head into a dealership with a clear idea of how much your vehicle is worth. There are several online tools that can help you with that, such as Canadian Black Book and VMR Canada.
Canadian Black Book is arguably the more convenient option, because it lets you figure out the actual trade-in value by factoring in your location, trim level, add-ons and the number of kilometres on your odometer. You can also factor in the price of the vehicle you are planning to purchase as a replacement. The biggest drawback to Canadian Black Book is that you can only look up this information on vehicles from model year 2002 or newer. If your model year is 2001 or older, then this tool will be of no use to you.
If that’s the case, you can try VMR Canada instead, which lets you look up the wholesale and retail values of any vehicle sold in Canada, with model years stretching as far back as 1983. This website takes into account your trim level and add-ons, but it will not factor in your location, the number of kilometres on the odometer or the price of the new vehicle you might want to trade in for. In other words, it’s a more limited resource overall, but useful enough to give you some idea of what you may be offered for your car.
Keep in mind that there is no tool in existence that can predict the precise trade-in value of any vehicle because all dealers are different. Factors like the dealership’s location or time of year can play a role in determining the trade-in value they would give you.
Vehicle Condition Assessment
Once you have figured out your car’s wholesale/trade-in value, you need to factor in another detail – the condition of your vehicle. Be sure it’s clean inside and out, properly maintained and functional. There could still be a few leftover issues here and there, but if they are not problematic, you can just avoid mentioning them when presenting your car to a dealer.
The key is to push the best aspects of your vehicle to the forefront, such as optional accessories and equipment along with any brand recommendations or awards from used-car magazines and guides. If the dealer does point out any issues or defects, then don’t deny or lie about them. Instead, underplay them and stir the conversation toward the more favourable aspects of your car.
Dealers also allow you to take advantage of something called “tax savings.” This involves subtracting the value of your trade-in from the retail price of its replacement before any of the amounts are taxed. This effectively reduces the tax amount you need to pay on your new vehicle. For instance, if the car you want to buy costs $40,000 and your trade-in value is $25,000, then the taxable amount is the difference of those two numbers, which is $15,000.
Convenience or In-and-Out Trade
If you want to maximize your trade-in earnings even more, you can try out something called a “convenience” or “in-and-out” trade. You trade in your old vehicle for a new one, but with a promise that the old one will be sold to a third party for the same price as the trade-in. The third party is usually someone you know personally, like a friend or relative.
If you want to profit from this, you need to agree with your third party on a price above the trade-in value, but below the retail cost. For instance, if the trade-in is worth $25,000, but the vehicle retails at $28,000, then you can set the price at $27,000. Doing so allows you to get more money out of your trade-in and lets your friend or relative to buy a cheaper vehicle. Combine this deal with tax savings, and you can save quite a bit.
The moral of this story is that you can only make a trade-in work if you are planning to get a replacement for your old car. If you just want to get rid of it, then a trade-in is pointless. If a new car is indeed what you are after, then be sure to look up a free price report on Unhaggle.com.