Why trade-in?
Trading in your
current vehicle towards another can partially offset the cost of the
new vehicle. The trade-in's net value goes towards the purchase or lease
of a new car. Conditions of a trade-in vary depending on who owns the
vehicle.
If you own the vehicle, trading-in means
that you're selling the car to the dealer for some determined price. As a
result, the price of the new car goes down, only.
If
you are leasing a vehicle and do not own it, trading-in means that the
seller of the new car agrees to pay the outstanding costs associated
with the lease. Depending on the financing of the new vehicle and the
outstanding balance on the old one, trading-in can either raise or lower
the new car's price.
top Why is it beneficial to trade-in?
When you trade-in you don't have to worry about selling the
vehicle yourself or any of the associated costs (advertising, showing
the car, etc). A dealer may offer a price you could not get yourself as
an incentive to purchase a new vehicle. If the trade-in has known
problems that could plague you later (when the buyer returns
complaining), selling the car to the dealer eliminates the bother.
Trading-in a lease car may relieve you of, in the long run, monthly
costs you cannot afford. Sometimes people trade in lease vehicles
because of poor gas mileage or lack of practicality.
top Why decide against
trading-in?
If you think you can get a better price
selling privately, and it's worth the time, money and effort, do not
sell to the dealer. Some cars are of special interest and dealers will
not always recognize those interests.
top What happens to a trade-in?
Some are kept by the dealer and resold as used cars. Many are
sent to auction and purchased by other dealers for resale. Dealers know
that auction prices often will not match the sum credited toward a new
vehicle, but they absorb the losses as sales incentives.
top How much can I expect to
get?
Check used car values in guides issued by
organizations such as Edmunds.com or the National Automobile Dealers
Association (NADA). Often both trade-in and private sale values are
listed. Factors such as mileage, overall condition, damage and known
mechanical problems heavily influence the trade-in value.
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