Step 2 – Value Your Trade-In

If you don’t have an existing vehicle to sell or “Trade-In”, you can skip this step entirely.

Obtaining an accurate estimate of your current vehicle’s value can be one of the most important steps in the entire new car buying or leasing process. Most people give little thought to this step, but the amount received for your “Trade-In” can greatly affect your monthly payment amount, the “APR” that you qualify for and the total sales taxes that you’ll have to pay. It can be one of the main factors in determining what you can afford to spend on a new car.

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  • (Expert Tip) Alpha CBA recommends that you use at least one online resource such as Kelley Blue Book ® for fair “Trade-In” and private-party-sale pricing information for your area. Other sites such as Edmunds and JD Power can also be used to easily compare information from multiple sources in order to accurately assess your vehicle’s value. (Note: Most vehicles fall in the Good or Average condition category rather than Very Good or Excellent condition category.)

  • (Expert Tip) Take your old vehicle into CarMax or a similar car buying service for a free “Trade-In” evaluation. The quote is usually good for seven to ten days and their valuation can be used as a bargaining chip with the dealer.

  • Consider having your vehicle detailed before you take it in for evaluation as a clean car usually receives better offers.

  • If you owe money on your current vehicle, contact your lender to find out the “Loan Pay-Off” balance. Use our Vehicle Equity calculator to determine your current vehicle’s equity position. If your vehicle has “Negative Equity”, review the Dealing with “Negative Equity” section below.

  • Call a local dealership of the same manufacturer as your “Trade-In” to see if they would buy your car outright at a good price. Tell them you are not ready to buy, so that they will give you a firm offer strictly for your current vehicle.

  • Utilize Alpha CBA’s “Trade-In” or Sell calculator to see which option is best for you. Dealerships may not always offer you the best price even when sales tax savings are considered.

  • Bring your old car to a few different dealerships to see which one provides the best offer. The only way to know the true value of your car is to shop around.

  • Take advantage of dealership special offers where they will pay a minimum amount for your “Trade-In” if that amount is much more than the vehicle is worth.

  • Beware of any online or over-the-phone pre-evaluation quotes. You may be quoted a high price just to get you down to the dealership at which point a lower price is offered due to identified issues with your vehicle.

  • Consider donating your vehicle to a charity such as Kars4Kids to help the less fortunate and for an additional tax credit.

DEALING WITH “NEGATIVE EQUITY”

Federal law requires a dealer to provide you with certain disclosures regarding the cost of credit before you sign a finance agreement. You should clearly understand how any “Negative Equity” is being treated before you sign.

  • (Expert Tip) If you have a large amount of “Negative Equity”, think about postponing your buying or leasing decision until you’re in a positive equity position or have enough of a down payment to offset the negative amount.

If you do decide to move forward with a purchase or “Lease”:

  • Consider a shorter “Term”, if you can afford it, to reach positive equity in your new vehicle sooner.

  • Ask the dealer how the “Negative Equity” is being treated on your specific deal and how your monthly payment is being impacted.