How Does Trading In a Car Work

There is always something nice when you can get a worthwhile thing out of a trade in. There are also some people who simply prefer to trade in their cars.

But before you try this, it is a must that you know how does a trading in a car work.

Many people these days actually opt to have their car traded if ever they would like to lease or buy another car. But how is the process of trading in being done? Will you use money when you trade in your car?

How it Works

How does a car trade in work? The first thing that must be done is for the car dealers to purchase from you your old car and give you due credit for the new car’s price. The credit for the trade in will be like the down payment and the price will be reduced from your new car’s cost, thus, your monthly installment will get smaller. The car dealer will have your old car displayed in his lot of used cars in order to sell it or he can also sell it in auctions for dealers where other dealers will buy it to include in their lots of used cars.

What Dealers Get

The car dealers can actually get more profit when they sell the used cars that they have taken as trades in. What usually happens is that the trading customer will be paid with low price of wholesale and then sell that same car for a much higher cost. This is the secret why they still stay in the business and how they earn money. Paying as little as there is to the customer is certainly an advantage on the part of the dealer. So, if you are smart enough, you have probably done some research for you to know the wholesale value that is fair enough for trading a car in.

Where to Get Retail and Trade in Values

The best source where you can get the values for trade in and retail will be the world wide web. There are a lot of sources online which can be of great help to you. But as you search, keep in mind that these values are not really absolute and they may actually differ depending on the dealers, the country parts and the interest of the dealer on your vehicle. The used cars’ values are very dynamic, changing much faster than something that can be kept up with a value guide.

Trading when Money is Still Owed

If there is still some money that you owe for the vehicle that you traded, you can still trade it. However, you should be mindful here. If the payoff of your loan is lower than the worth of the car that you will trade in, the car dealer will get the car, pay the balance that you still have and then apply the rest as credit for the new car that you will get. This remainder will be the trade equity.


    (All the above fields are required.)