Timing Your Trade-In

The combination of time of year and any new-car promotions on the same model you are driving - which then affect used-car values - can mean thousands of dollars of difference on your trade-in.

Used car values drop more swiftly late in the year. New models have just appeared, while bad weather tends to hurt attendance and values at used-car auctions. Hitting used-car values even harder, though, are the new car incentives offered by manufacturers. When the value of that new car is reduced by a rebate, prices for corresponding used cars take a hard hit.

More than half of new-car buyers trade in their old cars. Most could get up to 15% more if they sold it themselves, but trading is far more convenient. And in many states, trading in reduces the amount on which you pay sales tax. That is, if you bought a new $20,000 car and had a trade-in for $10,000, you would pay sales tax on only $10,000 instead of the $20,000 with no trade-in. In a state with a 6% sales tax, that’s a $600 tax savings.

With a trade-in, how your car looks, its mechanical condition, the condition of the tires--even the color--all affect the value.

What you can do:

Make the seasonal factor work for you. From April through September, an average used car loses about 0.75% per month in value; in October through December that nearly doubles to 1.5% per month. But in January - with car buyers and automotive pros at auctions more active again - values stabilize and even may rise a bit. So if it’s late in the year, wait until after New Year’s, when you are likely to get more for your trade. Some models are special cases.

Get your car in top condition. Get a professional detailing job. You will more than recapture the $75 to $150 you may pay for painstaking cleaning in trade-in value.

Get an advance idea of your car’s value. You at least will be able to tell if the trade-in offer from the dealer is in the right ballpark. Check our Car Pricing Guide to get an idea of trade-in price for your car.

Dealing with the dealer. When you get to the dealership, try to negotiate price on a new car before talking trade-in. Otherwise, the salesperson may give you a high trade-in value and make it back in a higher price for the new car.