When Do I Tell the Dealer I Have a Trade-In?

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Contributing Writer

Bethany Hickey is a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. She is a content writer for Auto Credit Express, CarsDirect, and many other automotive blogs, as well as the Poetry Editor for UM-Flint’s writing magazine.


, Contributing Writer - August 11, 2020

A dealer is usually a regular guy, but they’re also looking to make some money – it’s their job, after all! That being said, we’ve got a few tips when it comes to revealing to the dealer when you have a trade-in, so you can get the most out of it.

Why Should I Wait to Reveal the Trade-In?

The first thing you should do when you choose a car from a dealership is to negotiate the selling price. Once you and the dealer reach a verbal agreement, ask them to draw up a buyer’s order which outlines everything you’re going to pay for. Once you see how much you’re paying in total, you can tell them that you have a vehicle that you’re looking to trade in to put toward the next car.

If you tell the dealership that you have a trade-in first, and you need another vehicle, they're likely to appraise the trade-in before anything else. This means they may over-offer on your trade-in before you settle on the price of the next car.

In some cases, a dealer could make it look like you’re getting a large offer on your trade-in, but, in return, they may also adjust the sales price of the next vehicle before negotiation.

What this means is that a dealership may raise the offer of the car you’re looking to trade in, and raise the price on the vehicle you’re looking to buy. When they subtract the trade-in value from the next car’s selling price, it may look like you're getting a lot for your trade-in and saving lots of cash on your next purchase.

However, an unscrupulous dealer that does this stands to make more money off the deal, since they're padding the price of the vehicle that you’re buying. You may not actually be getting any amount “really” taken off with the trade-in, since they raised the selling price before they factored in the trade-in amount.

Here’s a quick scenario to illustrate this point:

You have a car you’d like to trade in that’s value is estimated to be around $4,000. You tell the dealership about it before you look at any other vehicles. They appraise your car, and tell you that they can give you $6,000 for it. The dealer then takes you to see some vehicles, and tells you a specific car is selling for $20,000 (but it's actually selling for $15,000). After you factor in your trade-in amount, it looks like you’re knocking down $6,000 and you only need to finance $14,000.

This means that the dealership has essentially made your trade-in only worth $1,000 instead of around $4,000. In many cases, you won't even realize that you're financing the next vehicle for close to its actual selling price, and the dealer is increasing their profit margin.

Not every dealership is going to do this, but just waiting to say you have money down and/or a trade-in is a good negotiation tactic. You want to get your next car’s price down as much as you can before you tell them anything.

Handle the trade-in and car buying processes separately, so that they’re two different deals that need to be worked out alone. Then, the actual value of your trade-in can really go toward knocking down how much you’d need to finance.

Getting the Most Out of Your Trade-In

To get the most out of your trade-in, don’t immediately showcase it. It may tell the dealer that you’re desperate to get out of the vehicle and into the next one. They may take notice and not be as flexible on the next car’s selling price because they may see that you’re in a rush.

A dealership that notices you’re desperate to get out of the vehicle may give you a lower offer. Another hint that you’re really ready to get rid of the trade-in is doing too much detail cleaning and removing all personal possessions. These are signs that you’re in need of another car that day, or that you may not even be driving your current vehicle.

Clean your car before you take it in to be appraised, but don’t go nuts. If the vehicle needs major repairs, it’s usually not worth your money or time to fix those, since dealers can typically address problems for much cheaper, which means you may not make the money back that you spend.

Even if you're desperate for another car (we’ve all been there), don’t let it show. Take your time negotiating for your next vehicle and look at multiple cars. You can balance being a serious buyer without looking like you're in desperate need of a vehicle.

Be careful not to appear like you're not a serious shopper, though. Buyers who appear to have no intention of buying anything may not get as much attention at the dealership. A dealer who knows you’re ready for your next auto loan may put in more effort to work with you on the deal – time is money!

Additionally, take your trade-in to at least three different dealerships, or at the very least call around. Don’t feel pressured to take the first offer you get. This way, you can shop for the best offer, and get an idea of your car’s actual cash value, which can give you another upper hand in the negotiation.

You could even try to sell the vehicle yourself. Our trusted partner will even provide an instant offer online for your used car. They'll also come to pick it up should you decide to accept.

Benefits of Trading In a Car

While it may seem like a hassle to go to a dealer and trade in a vehicle, they can be extremely advantageous to you, especially if you have less than perfect credit. Trade-ins with equity can not only lower the cost that you would need to finance, they help bad credit borrowers meet the down payment requirements of an auto lender.

If your credit isn’t exactly stellar, you may be required to bring cash to the table to prove you’ve got skin in the game. Typically, bad credit borrowers are expected to have at least $1,000 or 10% of the car’s selling price, sometimes whichever is less. If you don’t have the full amount in cash, your trade-in could help cover it.

Another bonus: putting money down in the form of cash or a trade-in lowers your monthly payment. The less you finance, the lower your monthly payment is; the less you finance, the less you pay in interest charges.

This is why putting money down is always a good idea, no matter what your credit situation is.

Ready to Look for a Dealership?

Car buying can be a hassle, but finding a dealership with the resources to work with your credit situation may feel like even more of one. We want to help with that here at CarsDirect. We’ve got years of experience, and a nationwide network of dealers that are signed up with bad credit lenders.

Since many traditional lenders may deny someone with a lower credit score down, working with the right lender for the job could mean getting into your next vehicle. To get matched to a local dealership with bad credit lending options, fill out our free auto loan request form.

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, Contributing Writer

Bethany Hickey is a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. She is a content writer for Auto Credit Express, CarsDirect, and many other automotive blogs, as well as the Poetry Editor for UM-Flint’s writing magazine.


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