Buying a new car can be an exciting and potentially frustrating process, but if you also intend to trade in your existing vehicle, you have a chance to save yourself time and effort. Trading in is faster and simpler than attempting to sell your car yourself, and if you know what to expect, you can make it even easier on yourself and the dealer.
Research Value
Researching the value of your trade-in is the only way you have to get an accurate picture of what it's worth. Even though this adds a step to the trade-in process, it means you'll know whether the price a dealer offers you is close to its actual value or way off the mark. Instead of looking for the best, highest or most precise value, collect several different values to get a general sense of your car's worth. For example, your local newspaper's classified ads, Internet auction sites and used-car dealer fliers may all provide different prices that approximate what your car is worth in resale.
Negotiate Your New Car First
Before discussing your trade-in with the dealer, negotiate a price on your new car as if you don't have a trade-in. If you attempt to negotiate two deals at the same time, there's more room for confusion and you might not realize that you received too little on your trade-in until it's too late. Dealers can also adjust the trade-in value to give you the deal you want on the new car, which hides its actual price. Once you've negotiated the total price (not the monthly price) and had the dealer put it in writing, but before you sign anything, note that you have a trade-in and ask the dealer for an offer.
Don't Haggle
Car dealers are less likely to haggle on the value of a trade-in than they are on the price of a new car. If you feel as though you're getting a good price for the new car, be willing to accept the dealer's initial offer for your trade-in to keep the process simple and move on to finalizing the deal. If the value is close to your estimated value from before you started shopping, accept it. Remember that the dealer needs to consider his inventory, the condition of your car and its appeal to buyers, as well as the cost of preparing it for sale and working out a deal with a new buyer, all of which takes up a sales professional's valuable time.
Applying the Value
Once you accept a dealer's offer for your trade-in, the simplest way to apply it to your new car is by using it as a down payment. The larger your down payment, the less you'll need to finance and the more you'll save on interest. If you have enough cash to make a down payment anyway, use it to cover the dealer costs, tax and other fees that add to the balance of your loan. This will leave you with more money each month to apply toward maintenance, fuel and insurance.
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