how does the trade in for a car work?

Question

ok say i barely got a car about three months ago and it cost me about 20000 and i want to trade it in for a car that is of a cost of about 25000. they wont give the the 20000 will they? do i pay the difference? i dont know someone help me please. :)

Answer 1

The minute you drive a new car off the lot, it drops in value. You'd be lucky to get 17000-18000 back and I'd plan for as little as 15000.

You trade it in and they're only going to give you the wholesale value on the trade and you will have to pay the difference.

Answer 2

Technically, "trading" a car is not really trading. You don't buy a car and then simply exchange it for another after a few months. It doesn't work that way.

To "trade" means your dealer agrees to buy your old vehicle for wholesale price and give you credit for that price against the cost of a new vehicle -- less the amount you may still owe on your loan for the old vehicle.

The problem is that the wholesale price of a vehicle you just bought 3 months ago is far less than it orginallly cost you -- due to rapid value depreciation. In fact, the wholesale value may actually be less than the amount you still on your old loan -- you're "upside down." Instead of getting a credit on your trade, you actually get negative credit, or a loan balance that is ADDED to the cost of the new vehicle. This means the amount of your new loan now exceeds the value of the new vehicle -- you're upside down again, except worse this time.

In short, it's not wise to trade a vehicle you've only had for three months. It'll cost you a heft sum of money to do so.

Answer 3

Its unlikely a car yard would give you what you paid for your car, even if it was only a few months ago that you brought it. They mark up the price of the car to give themselves a profit, and would want to do the same with your trade-in.
Yes, you will have to pay the difference between the trade-in price and the price of the newer car. Also if you owe money on the car (hire purchase/lease/loan) they will pay that out first, and you will have a bigger difference to pay. So if you don't have the cash, organize a loan before you go in. The car yard may offer finance but it may not be the cheapest available.
So check out all your options before deciding on the other car. You might find yourself further out of pocket than you first thought. Don't forget taxes and duties on car sales, that apply where you live, those have to be covered too. And Insurance.

Answer 4

You didn't say if this was a new car or used. If you look at the Blue book value can give you an idea what your car is worth so you can have a little bargaining. Its not what you paid for it that matters, it what it is worth.
The dealership will make an offer for Trade in they will give you on your car and you pay the difference. Since they also will sell your old car hopefully for them at a profit. They will not give you the Blue book value.

Answer 5

Did you pay cash 3 months ago? Do you own the vehicle? If so, they will give you market value on trade for a new vehicle. If not, and you have it financed, they will roll over what you still owe after deducting the market value into your new loan, and you really DON'T want to do that.

Either way, trading this soon you will lose money. But hey, your choice.

Answer 6

If you just bought the car 3 months ago, then you need to keep it for awhile. There is no way you are going to aviod losing thousands on the car, it doesn't matter if you trade it of sell it.

Answer 7

Sell your used car
Some people are lost when it comes to the trade-in portion of the negotiations. But that's ok, because we're here to help answer your questions.


What should I know before I trade-in my used car?
The most important thing to know is what your used car is worth. You need to remember that you are, in effect, selling your car. And just like you would do if you were selling your car to someone outside of a dealership, learning the value of your used car is imperative. This way you have a general price and you won't accept a sometimes deliberately low offer from a dealer. Make sure you factor in features that may positively affect the price, such as air conditioning, sunroof, cd player/changer, power windows, etc. Also be sure to factor in conditions that may adversely affect the price such as high mileage, dull or chipped paint, rust, chipped or pitted glass, worn or stained upholstery and carpeting, worn suspension, poor alignment, etc. These are things that you may consider addressing before trading in the used car.

Also keep in mind you are determining trade-in value (also called wholesale value,) not retail value.

What is trade-in value and how do I find it?
The trade-in value of a car is basically the amount someone who plans to resell the car will pay it. There are a variety of books available at many banks, libraries and credit unions, as well as online, that can be used as a rough guide to basing a trade-in value. Rough, because there are too many factors to go into pricing a car to print absolute prices for each year, make and model. Time and location are also factors. However, they are difficult to evaluate.


Can I count on the car dealer or mechanic to come up with a fair price?
No you can't. A car dealer will usually try to get your trade-in for less than what it's worth. This occurs because the seller generally doesn't have an inkling of what his or her used car is worth. Therefore, offering $500 less than the car's actual value is possible, and not uncommon. A lot of dealerships, wholesale managers in particular, will try to low-ball you for about 85 to 90 percent of the car's actual value. Knowing this, you can go to three or four dealerships, get an offer from each, average them and then add on 10 to 15 percent. This should give you a good idea of the wholesale value of your used car.

The cold truth is that new car dealerships make more profit from used cars than they do with their new car sales. They can make a profit of 300 to 400 percent on a resale. This is why the car dealer may try to convince you that it's a hassle to sell your used car yourself.

Be aware that the dealer may not even offer you a trade-in. Your car may be too beat up, or have too many miles, or the dealer may already have 18 Jetta's on the lot and doesn't want another. In this case, you may consider selling it yourself. You can also sell it to a used car lot, but you are almost guaranteed raw deal from used car dealers. They rarely pay what a car is worth, considering they're going to resell it and can't charge more than the car is worth.

What are used car trade-in allowances?
Be careful with these. Trade-in allowances are given to people who the car dealer believes puts a lot of emphasis on getting the most for their used car. In other words, those who demand a great deal on their used car or who feel that getting a great deal on the used car is more important than a good sticker price, will get it. However the car dealer will include charges to balance this out, or omit any discount off the sticker price, often unbeknownst to the buyer. The more savvy car dealer will lead you to believe that by getting a good trade-in transaction, you are getting a good deal overall. The best thing for you to do is to tell the dealer that you do not want any allowances. Even better, just ask how much the dealer will give you for the used car, as if you aren't thinking of buying a car from them just yet. Then you have the option of selling the used car before buying a car. This strategy can work out well for you, even if it entails being without a car for a couple of days.


What about getting a professional appraisal beforehand?
It's not necessary, but that's just me. I hate paying for things I can do myself. You can be asked to pay anywhere from $30 to $300 for a professional vehicle appraisal. As I mentioned above, you can use the car dealerships to provide this for free. Go to three or four dealerships that have a used car lot, and just say you're interested in selling the car to them. Get an offer from each, average them and then add on 10 to 15 percent. This should give you a good idea of the wholesale value of your used car.

Should I repair and professionally detail my used car before selling it?
If you can do a few minor repairs without breaking the bank, go for it. It can even add to the value of the used car. However, this matters more when selling the car than it does trading it in. So use your judgment on what is important and what isn't necessary. Remember, some repairs may cost more than what you'll have added onto the wholesale value in the end.

A clean and shiny used car is going to look more attractive, and again, it can't hurt to have it look nice. But a wash and a vacuum will suffice; no need to wax and Armor-all it.


How important are the condition of my tires?
The tires can play a significant role in the determining of the value of your used car.

First of all, a used car that has mismatched tires, either by type or by size, will take a hit in value. Mismatched tires takes away from the attractiveness of a car, and can also indicate troubles with the rear axle.

Also, tires that are worn can indicate poor maintenance, which can lead to greater scrutiny. And tires that are worn unevenly can indicate that there's been damage to the frame, or that the alignment is shot. Either can lessen the value of the used car.

What about things like fluids and belts?
You should have these all looked at. For example, if you notice that your radiator fluid is discolored, you should have the radiator flushed and add fresh coolant. Check your oil as well. Dirty, sludgy oil can mean a heavy engine job is on the horizon. Or burnt transmission fluid means a transmission job. And either of these could cause the car dealer to decline you of a trade-in. Look at all of your belts, hoses, anterior pipes, muffler, etc. These can all be problem areas that can be fixed fairly easily and cheaply. Your suspension is a hot spot with the dealers as well. Push down hard on the hood. If the front-end bounces, you may need to replace the struts.