The Ultimate Dealership Trade-in Guide for 2025
Expert Tips and Advice on Trading a Car at a Dealership in 2025
I highly recommend selling your trade-in privately rather than at a dealership. You will make more money selling it on your own. But if you must trade with a dealer, my dealership trade-in guide will help you navigate the process.
I understand that some people must trade in their vehicles because they don’t have the time or patience, and that’s okay. During the trade-in process, two standard practices are offering you wholesale prices or less and attempting to “hold money on your trade.” This means a dealer will initially provide less than your vehicle is worth during negotiation.
What is a Trade-in?
A trade-in vehicle is one that you provide to a dealership in return for credit against the purchase price of a new car. A trade-in can generally be any car that has an actual cash value. However, the amount for the trade-in can vary substantially.
How Does Trading a Car Work?
During the appraisal or trade-in process, you turn your keys to the dealership and let them value your vehicle.
The used car manager or appraiser will look at your car, inspect it, test drive it, check your vehicle’s current market, and then put a wholesale value on it. They will then present the offer amount to you. At this time, you either accept it or not.
When trading a vehicle, you turn into the “Seller,” and the car dealer becomes the “Buyer.”
The appraisal or trade-in process is when car dealers have an opportunity to enhance their profit. If you are unfamiliar with this process, you can quickly become a victim.
If you would like to learn more details, please read my step-by-step breakdown of the dealership trade-in process and what happens when the dealer presents you with the actual cash value of your trade.
If You Must Trade In Your Car at a Dealership
Understandably, most people don’t want to worry about strangers coming to their houses or having the time to sell their current car privately. They prefer not to deal with it by trading it at the dealership, where they buy another car.
Trading your car at a dealership is much easier than selling it privately. Some states will even give you a sales tax break by only making you pay sales tax on the “trade difference.”
If a dealer offers a wholesale value of $8,000 for your vehicle and your state sales tax rate is 8.25%, you will save $660 in taxes. That’s a total of $8,660.
Remember, if you took the time to sell it for retail on your own, the retail price could be closer to $11,000 or more.
However, if you must trade your vehicle with a dealership, take the time to learn the correct way to trade in a car to guarantee you get the most money possible in your local area.
Pros and Cons of Trading in a Car at a Dealership
What I like about trading in a car (pros):
- Quick transaction – the dealer handles all of the necessary legalities and paperwork.
- No strangers – You don’t have to deal with strangers who appear to look and drive the vehicle.
- Money down – Increases your money towards purchasing the car you’re buying.
- Make ready – The dealer does all the necessary maintenance to get your vehicle ready for sale.
- Lower price – The amount gained from trading your car will lower the purchase price of the vehicle you’re purchasing.
- Tax advantage – If you live in a state with a tax advantage, you may only have to pay taxes on the trade difference, saving you more money.
What I dislike about trading in a car (cons):
- Lower offer – You will never get as much money as you would if you sold your car privately. Your vehicle is only worth what the dealer will give you, and there is little room for negotiation.
- Supply and demand – The rules of supply and demand apply to all transactions. If a dealer already has eight Toyota Camrys on their lot, they are unlikely to offer anything close to fair market value for another.
- Profit margin – The dealer must sell your trade-in to earn a profit. This implies they will only give you the wholesale price of hundreds, if not thousands, of dollars less than the retail market value.
- Trade-in scams – An unethical dealer may attempt a common scam such as the pay-off of your car scam or trade-in value scam on an unsuspecting car buyer.
What is Positive Equity and Negative Equity?
If you’re trading in an automobile on which you still owe money, you’re in one of two situations:
- Positive equity – If your vehicle’s value exceeds your loan balance, you’re in excellent condition. This difference, called positive equity, is equivalent to having money to purchase a new car.
- Negative equity – If the value of your car is less than the amount owed, you have negative equity, also known as being “upside-down” or “underwater” on your car loan. When trading in a vehicle with negative equity, you must pay the difference between the loan balance and the trade-in value. You can pay it in cash, with another loan, or by rolling what you owe into a new car loan, which most financial experts and I do not recommend.
See what your trade-in is worth to determine whether you have positive or negative equity. Knowing your vehicle’s value before shopping for a car will help you choose the best option.
When Should I Tell the Dealer I Have a Trade?
The professional car salesperson will tailor their “fact-finding” questions to everyday conversation. These questions include, “How do you plan to pay for your new car?” “Are you putting any money down on the vehicle?” and “Will you replace or add a vehicle with this purchase?”
Do not tell the dealer you want to trade your car early in the car-buying process. If a salesperson asks you if you’re trading in a vehicle, tell them “no” or “not at this time.” However, you can change your mind later once you’ve agreed on a price for the vehicle you’re buying.
“After you agree to the selling price of the vehicle you are buying”
The time to bring up your trade is when you have agreed to the purchase price of the vehicle you would like to purchase. Doing this will lock down your agreed-upon price, and the dealer will not be able to manipulate that amount.
Suppose you tell a dealer about your trade-in too soon. They may use this information against you by attempting the trade-in value scam during the negotiation process by giving you a low purchase price on the car you want to buy and then make up the lost profit by holding on to your trade.
What You Should Not Say About Your Trade-in
Most car dealers will come right out and ask you what you want for your trade-in as soon as possible. The dealer is trying to find out if you’ve educated yourself on the value of your vehicle.
I don’t know how often I would hear, “I think my car is worth $XX, XXX.” My next question to the customer was, “Where did you come up with that number?” Most customers would say, “I just think it’s worth that.”
Making a statement to a car salesperson puts you at a considerable disadvantage. You just let the dealer know you haven’t done your homework, and they’ll most likely hit you with a meager value for your trade-in.
What if You’re Asked How Much You Want for Your Trade?
As stated above, a dealer will ask early in the sales process if you’re trading a car. As harmless as this question sounds, it’s a big part of the salesperson’s agenda. The dealer will use this information against you later during the negotiating stage. They will also ask you how much you want for your trade.
When you decide to bring up your trade, this is what you should say if the salesperson or manager asks you how much you want for your trade-in:
“I have no idea. You tell me what it’s worth.”
A dealer does not like the above answer and will most likely keep trying to get a number out of you on what you think your car is worth.
Hold your ground and act oblivious to how much your car’s worth.
Whatever you do, please don’t give them a figure; make them give you a figure first.
How to Estimate The Value of Your Trade
The last thing you want to do is let a dealer tell you how much your trade is worth without doing some research yourself. I guarantee they will attempt to “steal” your vehicle by offering you much less than its worth.
To avoid a dealer lowballing you, you must determine an estimated value of your trade before contacting a car dealership. Doing this will keep the dealer from having the opportunity to take advantage of you when negotiating the value of your trade vehicle.
A vehicle appraisal is just one person’s opinion
If you tell ten used car managers to appraise the same car, you will get ten different values of what they believe the vehicle is truly worth.
I know I will hurt some readers’ feelings out there, but SENTIMENTAL VALUE does not add to the actual value of your trade. What a vehicle is worth; is what it’s worth. Even though it’s your first car or you’ve never had any problems with it, it will only be worth so much money.
So how do you find out the value of your trade? It’s not an exact science. However, there are some steps you can take on how to estimate your trade’s worth.
How to Get the Most Money for Your Trade
When you trade your car to a dealership, you’re selling your car to the dealer. Your goal is to get as much money as possible for your trade-in.
As a dealer myself, I’ve appraised thousands of vehicles. I can tell you I’d personally deduct money if the car I was appraising were filthy, dirty, or full of trash.
Why would you make me get in and drive your nasty car around the block? I wouldn’t even want to sit in it! I promise other dealers will feel the same way and deduct money from the value.
On the other hand, when I appraised a clean car that looked and drove like, someone took care of it. I would be more inclined to value the vehicle higher than if it was filthy.
I’ve compiled a list of convenient tips to increase the value of your trade-in at little or no cost. These tips will increase your chances of getting more money from a used car appraiser when he examines your car.
How to Sell an Old Junk Car Online
A dealer may tell you they are offering an unbelievable amount for an old junk car, but I promise they’ll try to make up the difference elsewhere during the sale.
If you have a car that doesn’t run or has little value. You may want to look into an alternative other than trading it in with a car dealership.
There are many other ways to make money, such as learning how to sell an old junk car online and turning the cash into quick cash to buy a new car.
Trade-in FAQs
Can I trade in a new car I just bought?
You can, but you will most likely lose money. It is best to avoid trading in your car when you just bought it. A new car starts to lose value as soon as you drive it off the lot, and it can lose up to 20% of that value in the first year. If you recently bought a new, not used car and are considering trading it in, I recommend holding off or selling it privately.
What affects trade-in value?
Dealerships will consider any vehicle with value accepted as a trade-in, but the compensation can differ significantly. The condition of the car, mileage, demand for that specific make and model, and your negotiating skills all play a part in determining the trade-in value.
What should you not do when trading a car?
- Not having a good idea of what your trade-in is worth
- Overestimating the value of your trade.
- Not cleaning your vehicle
- Telling the dealership, you plan to trade your car too early
- Not receiving more than one trade-in offer
What is considered too many miles for a used car?
There isn’t a set amount of excessive miles for a used car. But you can take 200,000 as the upper limit, the point at which even modern cars start to break down due to years of use.
Why is trade-in value normally low?
Dealers appraise used cars using wholesale values. Another reason trade-in values are lower than retail pricing is because most trade-ins require reconditioning. A dealer will not usually sell a car right away after receiving it in trade from a customer. Instead, they spend time and money preparing the vehicle for its future owner.
About the author
My name is Carlton Wolf, and I’ve been in the car business since 1994, both retail and wholesale. I created the Auto Cheat Sheet to better educate buyers about the deceptive sales practices many dealerships use nationwide. Please understand that not all car dealers are dishonest. However, you never know who you’ll be dealing with, though. I’m willing to share my knowledge and experience with anyone who listens. Keep in mind that I’m a car guy, not a writer.
