1. "Stage" your car.
In real estate marketing, "staging" is a process real estate agents use to help customers visualize themselves in the new home. They might add art, furniture and ensure the yard is trimmed. According to Bankrate, spending even a mere $50 to "stage" your used car by having it cleaned and detailed could net you an increase of several hundred dollars in trade-in value. Staging clearly works—for homes and for cars!
2. Keep trade-in value separate from a new-car purchase.
I’ve made mistakes in the past when negotiating the trade-in value of my own used vehicles. The biggest mistake I've made—a mistake I share with many other car owners—is to treat the trade-in negotiation as part of the larger negotiation of buying a new car. Experts state: this is a fast track to getting less money in trade-in value than your car can command.
Here’s why: when you use your trade-in value as a bargaining chip, you may get the dealer to agree to your terms, but you don't know where they might turn around and recoup their costs when selling you the new vehicle (common places are to offer less advantageous financing terms or refuse to come down on sticker price). In doing my own research, I’ve learned that the best way to get the highest trade-in value is to complete that negotiation in full first. Once the trade-in negotiation is complete, I can then look at whether I want to purchase a new vehicle from that same dealership.
3. Understand the "soft benefits" of trading your car versus selling it yourself.
Choosing to trade in a car versus sell it has its pros and cons. For instance, MSN Autos states that owners who choose to sell a vehicle privately often get a higher price than they would get by trading it in. However, private sellers can also expect to incur some costs in order to offload their vehicle in a private direct sale.
Here are the three most common costs of selling a vehicle privately that many vehicle owners forget to factor in:
- Legal liability: This can encompass anything from a post-sale breakdown to the buyer reneging on the price.
- Marketing costs: Frequent detailing, gas-guzzling test drives, mechanic consultations, advertising fees—all can add up quickly.
- Time: It’s important to factor in how much time it will require for you to get the best price in a private sale.
4. Trading in a vehicle brings sales tax advantages.
For me, one of the most attractive advantages of trading in a car versus selling it comes at tax time. I found out from researching on Cars.com that most states only require a new-car buyer to pay sales tax on the difference between what the old vehicle commands in trade-in value and the sticker price of the new vehicle.
Example: Here, if you purchase a vehicle worth $30,000 and you get $12,000 in trade-in value on your old vehicle, you pay sales tax only on the $18,000 difference instead of on the full $30,000 sticker price!
5. Know your old vehicle's Blue Book value as a starting point.
My degree is in business and marketing. I spent the first several years of my career in sales and advertising, so I know that a well-prepared sales pitch is a well-researched sales pitch. When trading in a used car, it’s important to know your negotiating range. You can use the Kelly Blue Book, Edmunds and NADA (National Automobile Dealers Association) to get a ballpark estimate of your car's fair market retail value.
From here, you can factor in the car's mileage, overall condition, maintenance and repair history, add-ons and customizations, demand (certain models and years may command a higher value), and other factors to arrive at your goal trade-in value.
6. "Bank" your trade-in.
When it comes to trading in a vehicle, you’re likely to get a better trade-in offer if another dealer also wants your vehicle. I’ve never accepted a trade-in offer from the first dealer I have presented my used car to—I just need at least two or three other offers before I can make a decision on where I can get the best deal. In this, I’ve found it does pay to shop around. Once one dealer wants my car, I automatically feel more confident going to a second and even a third or fourth dealer to see what they will give me.
Note: In the auto industry, this is a legitimate negotiating strategy called "banking your trade-in."
7. Remember, both same-brand and different-brand dealers want you to choose them.
Finally, while I didn't know this when I was shopping around my last used vehicle for trade-in, in more recent research I’ve learned that in order to get the best range of offers, it can pay to offer your car to both same-brand and different-brand dealers. As it turns out, while it’s likely that same-brand dealerships will give you the best trade-in offer, sometimes a certain brand is in demand in the most unlikely places. (For instance, you may find the highest demand for used Hondas at your local Ford dealership!)