How is Trading in a Car Benefiting You Financially?

Marc Skirvin
Marc Skirvin

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Ready to get a new car and save money?

You may be itching to sign on the dotted line for your new car loan. But what are you going to do about your old car?

A lot of people decide to sell their current cars privately before they make a new vehicle purchase. This is definitely a good solution for some fast cash in your pocket.

But selling your car privately may actually not be the most lucrative option out there. A lot of car owners overlook the possibility of trading in their car and its numerous benefits.

Trading in a car can actually be a better financial move for you than selling a car. Read on to learn more about how car trade benefits you financially overselling your vehicle.

1. Reap the Tax Benefits of Trading in a Car

You may be thinking, Now wait a minute. Tax benefits on a trade-in?

That’s right. When you sell a vehicle on your own terms you have to deal with sales tax, depending on the state in which you live.

But in most states, when you trade in a vehicle, you only have to pay tax on what you pay–the difference between the trade-in value you’ve been given and the full price of the new vehicle you purchase or finance.

Reducing the amount of tax you pay on your purchase is enough of a financial benefit to make trading in a vehicle more lucrative than selling one.

2. Dramatically Reduce How Much You Need to Finance for A New Car

When you trade in a vehicle, the dealership will be essentially purchasing your car from you. The amount the dealership pays you for your car will depend upon its condition, year and model, and saleability.

Instead of giving you cash, the dealership will apply the purchase amount to the price tag of the new vehicle you want to purchase. Think of it as a massive discount.

This means that you could walk away with a fully paid for car–if you have enough cash in your pocket for this–or, at the very least, significantly lower monthly payments for a financed vehicle.

When you privately sell a vehicle, you risk losing money depending upon your ability to find someone willing to pay the price you need. You also may still wind up having to finance a new vehicle.

Trading in a car means less debt in the long run–and maybe even zero debt.

3. Save Time and Effort

When most people sell their vehicles privately, they use a website like Craigslist to do so. This involves a lot of time and effort because the sale becomes your responsibility.

Trading in a car means that you don’t have to deal with posting ads on Craigslist, taking photos of your vehicle, and taking calls from prospective buyers. You don’t have to wait around for a sale to happen. Your trade in–your cash!–is guaranteed.

Trading in a car means that you’ll definitely get that car off your hands and drive a new car off the lot in the same space of time.

You won’t have to put in much effort beyond shopping around for places to trade your vehicle in, going into the dealership, signing some documents, and making your decision.

When you do a vehicle trade-in, you are choosing a fast, convenient, and headache-free experience. You save valuable time and effort.

4. Popular Models Generate Cash

Dealerships are more likely to give you a higher price on your current car if it is a popular model, or at the very least one that is demand in your area. If you are living in a city, for example, a recent model of a commuter car is likely to be popular.

You can shop around to find a dealership that is likely to be more interested in your model and make of car. Feel free to call and ask directly how many current cars like yours are on the lot.

Some people even travel to other towns, cities, or states to trade in vehicles depending upon where the demand lies.

The great thing about trading in a car is that you can hunt for the best place that will give you the most amount of cash for your vehicle–and, by extension, a smaller down payment for your new vehicle.

5. The Better the Condition of Your Vehicle, The Higher the Trade Value

This may seem obvious, but it is a key point to keep in mind when trading in your vehicle. Even if you want to sell your car on your own, you’ll still want to clean it up so that you are selling it in the best condition possible.

The same goes for trade-ins. Cosmetic damage will knock off dollar value, as well as anything serious on the mechanical side of things. You’ll definitely want to think about getting any repairs out of the way before you bring your vehicle in for trade.

If your current vehicle is in pretty stellar shape, lucky you! You’ll get a higher trade value in general.

6. Choose Your Profit and Your Price

It may be pretty evident by now that trading in a car is a negotiable thing. You can choose the dealership you want to purchase your vehicle depending upon where your car model and make is in demand.

You can also feel free to haggle, or negotiate, the purchase price of your vehicle. You can even walk away if you aren’t happy with the price offered.

This means that you can choose the trade-in value–to an extent–and even negotiate your purchase for your new vehicle.

Trading in your vehicle gives you a greater sense of financial empowerment than selling your vehicle does. And that is worth every penny.

7. Save Money on Car Insurance

Auto insurance monthly and yearly payments certainly add up, even when you’re not selling your vehicle. But when you trade in your car at a dealership, you immediately take that car off of your auto insurance policy.

On the other hand, when you sell your car privately, you still have to pay insurance on it until you find a buyer. Trading in a car will save these dollars, which you can put towards a down payment for your new car.

8. Avoid Refurbishing and Repairing

When you sell your car to a private party, you want to sell it in the best condition possible to get the highest price.

You’ll likely want to jazz your vehicle up and take care of any necessary repairs, both cosmetic and mechanical. You might not even be able to sell your car without an official inspection first.

When you trade in your vehicle, you don’t have to worry about this. You are guaranteed a purchase without repairs. Save money now by taking your car for a trade-in.

What to Do When Trading in Your Vehicle

If you’ve read through our reasons why training a car can benefit you financially, even more so than selling your car privately, there are a few steps to follow to ensure a successful and lucrative trade-in.

1. Check Out Your Car Value

Before you head into the dealership office, it’s good to walk in with solid numbers of your car’s value. The best way to assess your car’s value is to go to Kelly Blue Book.

Here, you can search for values of both new and used car prices. It’s also a great resource if you want to browse for your next dream vehicle and price point.

You can print out a detailed evaluation of your vehicle’s value to have on hand when you head to the dealership for your trade-in.

2. Clean Up Your Car

When you are trading in a car, it’s important to spruce up your vehicle before you bring it in. Give it a good internal and external cleaning–car washes are great!

Also, take care of any preventative maintenance.

You may want to repair anything that needs repairing prior to your trade-in, although this is not mandatory. For the most part, you want your vehicle looking shiny and in the best condition possible to maximize your trade-in value.

3. Do Your Research and Do It Well

Trading in a car is a serious thing. It involves a healthy amount of research to ensure that you are getting the best deal possible, both on your trade-in and on your new vehicle.

We recommend checking out dealerships in your area to see where your vehicle will be in the most demand. Don’t be shy about investigating dealerships beyond your town or city–it can be worth the effort.

Be upfront when you call these dealerships and ask about their trade-in process. Some may offer a free online quote.

Also, research what new vehicle you would like. See if the dealership you’re eyeing offers that same vehicle, and come prepared with questions about those models.

It can’t hurt to also get a value estimate for the new vehicle you’d like. This way when it comes to negotiation you can be prepared.

Lastly, check out the customer reviews for each dealership. These go a long way in telling you about what service you’ll be getting.

4. Make Sure You Have the Right Documents

Trading in a car does involve paperwork, but don’t worry–it’s simple and fast. You’ll need to gather your driver’s license, the title of your vehicle, and your car’s registration before you head on over to the dealership to complete the trade-in.

Keep in mind that dealerships often won’t do trade on a vehicle that you still owe money for.

5. Ask Questions

When trade-in day arrives, come prepared with questions about anything and everything. You deserve the best possible trade-in price and deal for your vehicle, and you have the power to ensure it!

If you haven’t already, make sure you are clear on all terms of the trade-in contract. Ask to see numbers, and make sure you ask about the condition and quality of the new vehicle you are purchasing.

The right dealership will be happy to answer your questions and give you an honest answer every time. The right dealership won’t offer scams.

6. Negotiate, Negotiate, Negotiate

Last but not least, don’t forget that you are able to haggle to get the price you want when it comes to trading in a car. Not only can you negotiate the trade-in value, but you are also free to work with the salesman to get the price you want on your new vehicle.

A lot of people overlook this key factor of trading in a car. They assume that a price is a price. This is not the case when it comes to trade-ins.

Trading In a Car Benefits You Financially

Cars are an expensive piece of property, what with repair costs, auto insurance payments, and fuel usage. When it comes to choosing a new vehicle, you definitely have opportunities to save money and maximize your financial outcome.

Trading in a car at first may seem like it’s not the best way to go. However, when you do the math, it’s clear that trading in a car is actually the best way to get the fastest and easiest amount of cash. What is more, it will save you valuable time and effort.

Take advantage of rare tax benefits by trading in a car, and don’t bother with putting up an ad on Craigslist or in the classified section of your local newspaper. Save money on car insurance with your immediate trade-in, and drive away in a new vehicle hassle-free with a smaller monthly car payment–or zero debt at all.

If you are thinking about trading in a car, make sure you know your car value before you take it to a dealership. Bring your car to the dealership in its best condition possible and get comfortable asking questions and negotiating prices. Above all, do your research so you know what you’re getting into and what new vehicle you’d like to purchase.

At Cash Auto Salvage, we purchase any vehicle in any condition. We’ve been helping car owners make money on their used vehicles across the nation for the past several years.

Our service is no-nonsense, scam-free, and highly professional. People can’t stop talking about us, actually.

Call us today to let us know what price we can offer you for your vehicle!

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About the Author


Marc is the Co-Founder of Cash Auto Salvage and Director of daily operations. He retired from a leading Internet Marketing company in 2013 and has been involved in the automotive industry ever since.

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