There are many car industry terms that you’ll come across when you shop around for a new car. If you’re upgrading to a newer model, you’ll see and hear the term ‘trade-in’ at almost every step of the process. But what does that term mean?
When buying a new car, you can ‘trade in’ your older vehicle for a discount on the newer one. The total discount, or the ‘trade-in value’ of your old car, will depend on the car’s make, model, and overall condition. Auto dealers decide the trade-in value, so it’s best to shop around to get the best deal possible.
The process of trading in your old car is pretty straightforward and can make the upgrading process much smoother for you. Still, there are a few more details you’ll want to understand about the process.
Keep reading to find out more.
How Does Trade-In Work on Cars?
A trade-in is a way to buy a brand-new vehicle for a slightly lower price by using a car you already own. You’ll do that by trading the older vehicle, which must be in your name, in exchange for a discount on your new car.
So, let’s suppose you have an older model vehicle and you’re in the market to buy a new one. In that case, you can offer the older model as a trade-in to the car dealer.
The dealer will then decide how much that older car is worth. If you agree to the trade-in value, they’ll apply that discount towards the one you’re buying.
That trade-in meaning is universal throughout the automotive industry, no matter where you are. People do trade-ins pretty much all the time, so your friends and family will likely advise you to do the same.
Still, you must understand that trading in your older car isn’t the only way to do things. Alternatively, you can sell the older car separately, take the money from that sale, and then use it to help pay for your new vehicle. In some cases, the value of that car could be higher through the private sale compared to the trade-in value a dealer might offer you.
What Is the Trade-In Value of a Car?[1]
These days, you can find the approximate trade-in value of your car online in just a few seconds using a trade-in car calculator. For example, you can check out Toyota Australia’s car valuation calculator here.
However, you must understand that the trade-in car price isn’t fixed or necessarily based on the car’s true market value.
Instead, the trade-in car value depends mostly on how much the dealer is willing to offer you as a discount on the new vehicle.
So, let’s say you want to trade in your car at a Brisbane dealership. That dealership could give you a trade-in value that’s lower or higher than the dealer next door.
Those differences in prices are the same even if you trade in a car in Melbourne or anywhere else because the dealers decide how much they’re willing to offer you.
Still, you’re not entirely helpless in this situation. Despite the differences in trade-in values by auto dealers, they tend to assess your car using the same criteria.
5 Factors Affecting Trade-In Car Value
So, here are five factors that influence the trade-in value of a car:
- Supply and demand: Supply and demand affect everything in the automotive world, including trade-in car values. If there's a strong demand for your trade-in car's make and model and the market isn't saturated, you'll likely get a higher price.
- Mileage and mechanical condition: Naturally, your car’s trade-in value depends on its condition. The two things that affect its condition are its mileage and how well you maintain it. In simple terms, a car in excellent condition pulls in a higher trade-in value.
- Vehicle interior: Other than the mechanical parts, the dealer will also take a peek inside the car to check its interior. The condition of the car’s dashboard and upholstery all play a part in the valuation. Think of it this way: if the seat is torn up, the dealer will have to spend more to fix it later.
- Vehicle exterior: Next, the dealer will also factor in the car’s external panels and overall frame. Any dents or scratches will lower the vehicle’s trade-in value.
- Modifications (if any): Last but not least, car modifications. Unfortunately, not all car modifications will increase the car’s value. Some might have the opposite effect of lowering the trade-in value, especially if it’s something that’ll discourage future car buyers.
Car Trade-In Tips to Get the Best Value for Your Car[2]
So, now that you know that dealers decide how much to offer for your trade-in and the factors they’ll consider, what can you do to get the best value for your vehicle?
Here are 3 quick tips to maximise your car’s trade-in value:
#1 Keep Your Car in Good Shape
The first tip is the most obvious: keep your car in good shape, both inside and out. Above all, stay on top of your regularly scheduled maintenance to keep the engine and other parts working well.
Besides that, don't skimp on repairs, either. Whenever your car needs to be fixed and parts need to be replaced, go for the best quality parts and repairs you can afford.
#2 Careful with Modifications
The second tip is less obvious but essential to keep in mind. Before investing in any modifications, always consider how they affect your car's future trade-in value.
For example, an upgraded in-car infotainment system could increase its trade-in value. However, turbocharging your car might lower the value since not many regular car buyers want a souped-up car.
#3 Shop and Negotiate
The third tip has nothing to do with the car itself. When you want to get the highest trade-in value possible, always shop around with different dealers and negotiate with each one.
Remember: Dealers decide the trade-in value, which means some will offer you higher prices than others.
Check out your options and never take the first offer.
Should You Trade-In or Sell Your Old Car?[3]
So, what’s the bottom line here? Should you sell your car privately or trade it to a dealer?
Of course, it depends on your priorities. For example:
- For Maximum Value: If you want to get the most dollars possible for your old car, you should sell it to a car buyer who wants the vehicle and not to a car dealer who has to sell it to someone else for a profit.
- For Maximum Convenience: If you want a no-fuss way to get rid of your old car, trade it in when you buy your new one.
To find auto dealers and other automotive businesses in your area, check out CarpartAU. The Directory will help you filter specific kinds of auto businesses in your area so you can contact them quickly.
You may also try these motor trade businesses in Dandenong and along Pennant Hills Road.
By Ray Hasbollah