Is Now a Good Time to Trade In My Car?

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


, - June 9, 2020

When it comes to selling or trading in a car, timing is important. In order to get the most bang for your buck, you should ensure there's equity in your vehicle, and that you get an estimated value before you hit the dealerships for appraisals.

But did you know there are outside factors that can impact your car's trade-in or resale value? It's true.

What Determines Vehicle Value?

Before you can determine whether or not it's a good time to trade in your vehicle, you have to know how much it's worth. If you own your car outright, the entire value you get is cash you can use. On the other hand, if you still have a loan balance, you can only keep what’s left after your loan is paid off.

A lot of factors go into determining the value of your vehicle, including year, make, model, trim level, mileage, color, and overall condition. You can see how these stack up to value your car by using an online guide such as Kelley Blue Book, NADAguides, and Black Book.

When you're entering information on these sites, make sure that you give an accurate account of your vehicle. Otherwise, the estimate you receive may miss the mark compared to what you're offered by a dealer or a private buyer.

Getting the Right Price

After you enter the car’s information, you'll likely see a few different values listed. Though they may be close in range, these price points represent what you might be able to get in different sales situations. Though you may not see all these figures on every valuation site, the most common values typically shown are:

  • Trade-in value – The amount you're likely to get from a dealer when you trade in for another vehicle.
  • Resale value – A reasonable amount you can expect from a private sale.
  • Retail value – The amount your car is likely to be sold for at a dealership
  • Certified pre-owned value – Falls somewhere between trade-in and retail values, offered for consumers with gently used vehicles, with a warranty, in good condition.

Keep in mind that you may not see an estimate for all of these values, and the actual cash value of your car is what someone – including a dealer – is willing to pay for it.

Depreciation and Vehicle Value

The type of car you're driving isn't the only factor that affects the value of your vehicle, but it can be a big one. As you may know, cars are depreciating assets, which means they lose value over time. Depreciation reduces the value of a vehicle, but not all cars depreciate at the same rate.

This is why, when you're shopping for a vehicle, it's important to keep long-term value in mind. Think Honda, Subaru, Toyota – these are brands whose used cars are known to hold their value and are usually in high demand.

As far as depreciation goes, some vehicles lose around 11% of their value as soon as you drive off the lot. In most cases, cars lose around 20% of their value in the first year of ownership, and continue to lose value more slowly after that. After five years of ownership, most vehicles are only worth about 40% or 50% of what they originally sold for.

You can minimize the impact on your pocketbook by paying attention to depreciation and selling or trading your car while it's still retaining value. However, outside factors such as the strength of the auto market can also have a big impact on your vehicle's resale or trade value.

This means if car lots are flooded with the same make and model you're trying to sell, you may not get what you're asking, even if your vehicle hasn't hit its biggest dip in depreciation. It's important to also check the national and local market to see if you have a good chance of selling, and see what others are getting for cars like yours. If you're interested in selling your car, our trusted partner can give you a quote online.

In times of economic turmoil like we're seeing from the global coronavirus pandemic, vehicle sales tend to slow. With so many used cars remaining on dealer lots, the value of used vehicles has dropped. And this affects how much you can get for your car. Fortunately, the auto industry is strong, and already appears to be recovering.

Ready to Trade In Your Car?

Whether you're looking to trade in your vehicle now, or are waiting for the market to recover, you can use CarsDirect to shop the new and used cars available for comparison to your trade. When you're ready to take the next step and actually get into a newer vehicle, we can help with that, too.

We work with a nationwide network of special finance dealerships that are teamed up with lenders to help people in many types of credit situations. Save yourself the hassle and stress of searching for a local dealer. Instead, just fill out our easy, fast, and free car loan request form, and we'll get to work matching you with a dealership in your area.

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


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