Trading in used car lowers the purchase price of your new car, and at the same time it is an excellent way to get rid of an old car without trouble of getting someone to buy it and hassling over the price. Also, it is a great deal especially for the car dealerships as they are going to pay you less then you would have gotten by selling the car yourself.
Naturally, they are also going to sell your used car for much larger price then they paid you. Very often profit on selling trade-in cars is larger then on selling new cars.
However car trade-in can still be beneficial to you because many states calculate the new car tax in a way to reduce the sales tax for the new car by subtracting the traded-in cars value. Unfortunately, not every state does this and you must check if this applies in your case, just ask your car dealership, they will know all about it.
Selling car back to the dealer is another way to profit from trading-in your car if you do not want to sell it yourself. For example if you drive a Ford and want to buy Nissan, you should sell your Ford to Ford dealership. You will probably get more for your car this way because it is usually worth more to Ford then it is to Nissan dealership.
If you want to find out what is the market price of your car, all you need to do is go and ask your car insurance company. Each insurance has so called Kelly Blue Book in which each cars value is stated based on a cars year and model.
Another good way to check for possible price of your old car is to search online and check for the prices of the similar models. While you are at it compare mileage as well as the prices. Be sure to have all this info before you decide on a trade in.
One small detail in trade-in, is cleanliness of your used car. Make sure to clean the car thoroughly both inside and out before going to the dealership. Also, remove all your personal things. Professional cleaning job can often increase your cars value so you can look at it as a kind of investment.
Clean cars often get offers higher for several hundred bucks then the messy cars. Remember that the dealers are just humans, they are like you and me and if they like what they see, chance is you will get better price.
So should you trade-in your old car?
No - If you have some experience in car selling and expect to get a better price selling it yourself.
No - If you are not in a hurry and can spend several weeks and possibly months selling your car.
OR...
Yes - If you do not have much time to waste.
Yes - If you want to avoid car-selling hassle (yes, you as a seller can also be hassled).
Yes - If your primary goal is to get rid of your old car and the price you will get for it only comes second.
At the end the choice is yours, but whatever you do not forget to bargain and try to get a better deal, no matter which way you choose to go.
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