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Calculating Car Trade In Value: How it Works

Christine Spencer

Auto Loan Expert

Buying a car can be stressful and expensive. Thankfully, if you already own a car to trade in, then it doesn’t have to be nearly so expensive. However, there’s a lot of things to consider when you’re trading in your car. That’s why we put together this guide to help you know everything you need when you trade your car in.


We’ll cover the different sources for car trade in value. We’ll also help you understand what factors influence the value you’re offered for your car. Finally, we’ll go through a list of ways to help make sure you get the most money out of your trade in.


Use this information to make smart decisions about trading in your car. Don’t let yourself be surprised when you go to get your next vehicle. This guide should also give you the arguments you need to negotiate a better price on your trade in.

Different Sources for Car Trade In Value

There are a lot of places that claim to have the best car trade in value information. However, there are three sources used by more car dealerships than any other. We’ll go over these three options so that you can understand what information the car dealership is using to value your trade in.


KBB Trade In Value

The most well-known car value guide is the Kelley Blue Book car value, or KBB for short. The KBB offers a comprehensive set of factors to determine the trade in value of a car. It takes all the information and produces an accurate value.


The information you give their trade in value tool includes the year, make, and model of the car. You also include the zip code and the car’s features. The tool uses your zip code to check recent trade in transactions in your area.


Once it has all of this information, Kelly Blue Book will give you an estimated trade in value for your car. Keep in mind that this is an estimate. Also keep in mind that you’ll need to rate your car’s condition, from fair to excellent. This is frequently a source of contention between car dealers and car buyers. Therefore, you should be sure to be well versed in their guide to what makes a car fall into one condition category or another. Kelly Blue Book Reviews can really come in handy. 


NADA Trade In Value

The National Automotive Dealers Association, or NADA, is another frequent authority when it comes to car pricing. The organization started in 1933 to establish a fair, unbiased price guide for different cars. The NADA car value is more geared towards dealers than the average consumer. Instead of telling you what you’ll get for your car, it gives your car’s current market value. It takes many factors into consideration, including geographic region, current market trends, time of year, and information about the car itself.


While this resource is more focused on helping dealers, you can still use it to your benefit. You can use the price the NADA guide gives you to negotiate a better trade in value for your car. If the guide says your car will sell for $10,000 and the dealer only offers you $6,000, then you have a compelling argument that they can give you a higher value and still turn a decent profit on your car. Make sure to read Nada Guides Reviews to help you in this process.


Edmunds Trade In Value

Edmunds is another one of the most popular car valuation guides. This option hits a sweet spot between the KBB’s options and NADA’s dealership-focused approach. That’s because it is easier to work through than the KBB tool, but provides way more information about your options than NADA does.


Edmunds’ car trade in appraisal tool asks the make, model and year of your car, and your zip code. It asks if your car includes any optional extras, and what condition it’s in. After that is where the Edmunds tool really shines. It tells you your value for trade in, and it also says what you can get from a private sale.


The Edmunds guide also offers you a handy break down so you can understand what factors influence the price. That includes your optional equipment as well as your regional adjustment, mileage adjustment, and condition adjustment. It also shows you what you would expect to pay for your car at a dealership.


That allows you to know how much the dealer can offer you and still price your car to be competitive with other car dealers and make a profit. Therefore, you can come to a fair trade in value for your car.


Even better, the Edmunds guide will let you enter your car’s VIN to see its value. That makes it simple for people who don’t know what optional extras they have or that don’t know much about cars to accurately get a price for their used auto.

Understand What Your Trade In Value Will Be

Aside from the valuation guides, there are several factors that go into how much a dealer will offer you for your trade in. This list should give you some clues about when the best time to trade in your car will be.

Car Trade In Value

Dealer Brand

The first thing you should consider is what brand the dealership is compared to your car. You can usually get a better value from trading in your car to a dealer that handles that make of autos. That’s because the dealer already has an inside line on the parts and labor needed to get your car into sellable shape. They also have a more accurate idea of what your car will go for. Finally, they can quickly and accurately review your car’s condition and understand if they can still offer some kind of guarantee to increase the car’s sale price.


Current Stock

The next thing you want to check is the dealer’s current stock. If they currently have many cars like yours, then they’ll want to offer a lower value. That’s because they need to protect themselves from holding too many of the same type of car at one time. Also, if the dealership already has several cars like yours, then it will take longer to sell them all. That’s because there’s a limited market for any specific type of car.


You can also use this information to your advantage. If you’re trading in a 4-year old sedan, and you notice that the dealership doesn’t have many sedans in stock, you can point to this as a reason they should offer you a better value. That’s because a lower supply of a certain type of car generally means a higher demand. A higher demand means a higher price.


Car Rarity

The next thing you should consider is how rare or common your car is. This can influence the price of your trade-in in several ways. A rare car could be worth more or less, depending on a few things. The more uncommon a car is, the harder it is to find parts for it. Also, those parts will cost more.


However, if you take your trade-in to a dealership that specializes in that make of car, then you might get more for your uncommon or rare car. That’s because the dealer will know how to get the parts they need. They also understand the value of the rarity your car presents, and already have a market of people interested in that car. As a result, it’s easier to sell, meaning your car should have more value.

However, if your car is extremely common, then there’s a huge supply of that kind of car. That can bring the overall price down. The flipside is that parts for common cars are really easy to find. They’re also much cheaper than parts for rare cars are. As a result, it will cost your dealer less to bring your car up to a sellable condition.


Trade In Value Guide

Finally, you should look at different trade-in value guides. KBB and Edmunds are two of the best options to help you understand your trade in value. That’s because they scan current car transactions in your area. It’s important to focus on geography when you’re considering a car’s cost. Some cars are more valuable in certain regions than others. Also, cars that “live” in certain areas of the country get more natural wear and tear on them.


For example, cars from the northeast and Midwest are more likely to have dealt with lots of snowy roads. The snow itself is a problem, but governments put down salt and grit to make snowy roads safer. These anti-ice and anti-slip tools can do damage to a car. The salt can eat away at paint and make the car prone to rust. The grit can also damage paint and can cause damage to vital components under the car over time. Therefore, cars tend to have a higher value if they’re in warmer areas that don’t see much snow.


Regional demand also plays a large factor. Large pickup trucks aren’t as common or popular in cities. People tend to prefer smaller cars that are easier to park and operate in a restricted city environment. In the same way, smaller sports cars and sedans won’t have as much appeal in the country. These populations tend to favor autos that are capable of doing more work, like hauling loads. They also might have to drive off-road more often. Therefore, they put a higher value on pickup trucks and SUVs than city drivers do.

    Car Trade In Value

    Ways to Get the Best Trade In Value for Car

    Now that you understand the different things that can affect a car’s price, you’re probably wondering how to get the best value for your trade-in. We’ve put together a list of helpful tips to ensure that you can squeeze every last penny from the value of your car.

    Clean the Car

    The first step may seem obvious, but you’d be surprised. Cleaning the car can make a tremendous difference in its trade-in value. A clean car gives the dealership the impression that it has been well-cared for. As a result, they’re more likely to look favorably on the trade-in.


    Also, when your car is clean, the dealership doesn’t have to put as much work in to get it ready for re-sale. Therefore, they save money on time and labor. When you clean your car, you should remove any trash, vacuum the interior, and wash and polish the exterior. This will also help minimize any scuffs or scratches on the car, improving its condition.


    Keep Maintenance Logs

    This tip is a bit more long-term. However, careful planning now can net you a nice return when you trade your car back in the future. Be sure to keep logs of any maintenance. That includes routine items like oil changes and brake pads, as well as more involved, costly, or complex repairs. This log can help demonstrate that the car is in good condition. It also lets the dealer get a better idea of how much work they’ll need to do to ensure the car is safe to drive.


    Dealers also like maintenance logs because they make a car easier to sell. Most people are nervous when buying a new car. Everyone fears that some problem is only waiting for them to drive the car off the lot to present itself. Maintenance logs help put these fears at ease. Future owners can see exactly how well the car was cared for. That gives them more confidence in the car and makes it easier for the dealership to sell it.


    Consider a Private Sale

    Next, you can consider a private sale. You will almost always get more money for your car in a private sale than you will get for a trade in. That’s because the dealership still needs to resell your car. As a result, they have to pay an amount for it that will still let them turn a profit.


    On the other hand, a private buyer probably isn’t planning on reselling your car immediately. Instead, they’re going to use the car. That means they can pay a bit more because they don’t have to worry about making a profit on the other end.

    There are plenty of downsides to a private sale though. It can take a long time to sell your car privately. It can also be a headache to deal with all of the paperwork involved. If you trade your car in, then the dealership will usually take care of the paperwork for you. All they’ll need from you is signatures.


    Additionally, dealing with the financial transaction part of a private sale can be a hassle. You might have to deal with large amounts of cash, which is dangerous and risky. You might also have to take a check, which could bounce. Lenders are less likely to provide an auto loan for a private sale, so you also might have to take payment for the car in installments. That can delay the amount of time before you get your new car. Especially if you’re counting on the value of your trade-in when buying new vs used car options.


    Dealer Trade In Value

    Next, you should be sure to look up the dealer trade in value. This small step can go a long way toward ensuring that you get the best value for the car you want to trade in. You can use this value to negotiate with the dealership. Many times, the dealership will make an initial offer lower than what they’re actually willing to pay. Knowing what other dealers have paid for your make, model, and year of car can help you spot these low-ball offers.


    Time of Year

    It may be surprising, but the time of year can have a huge influence on the value of your trade-in. That’s because the price of a car changes over the course of a year. Dealerships will offer a better trade-in value if you’re buying a new car shortly before the next model comes out.


    This is because dealers want to clear their stock so that they can have as much room for brand new models as possible. Brand new cars have a much higher profit margin, so dealerships make a lot more money if they can sell more brand-new cars.


    As a result, the dealership is likely to give you a better deal on your trade-in if they think it will help them move one of their current new cars off the lot to make room for the next year’s models. You can use this to your advantage in price negotiations to ensure you get the best deal.


    Mileage Milestones

    Another way to ensure you get the best car trade in value is to trade your car in before it hits mileage milestones. A mileage milestone is a point when the car will likely need some kind of major service or maintenance. Most cars put these at 50,000, 75,000, and 100,000 miles.


    These are also points where the value of your car has sharp drops. There’s not much difference between two cars that are exactly the same, but where one has 54,000 miles and one has 60,000 miles. However, there’s a huge gap in the value between the same two cars with one having 48,000 miles and one with 54,000 miles.


    You can use this to your advantage to ensure you get the most life out of your car. Then you can use this information to plan ahead and start saving for your next car. That will let you get a better deal when you trade in your current car. 


    Before High Mileage

    On a similar note, you’ll get a better trade-in value for your car if you trade it in before it gets high mileage on it. That’s because high mileage cars don’t sell for very much money. In addition to the miles themselves, the more miles a car has driven, the increased likelihood that it will need some kind of major repair work soon.

    Additionally, the longer a car has driven, the more it’s been used. That means it’s more likely to have scuffs, tears, and stains in the interior. It’s also more likely to have scratches, dents, and damage on the exterior. All of these dings and flaws can add up to a huge difference in the value you’re offered for your trade in.


    Trade Before it Breaks

    Finally, you want to make sure you trade your car in before it starts to break down. This can require careful planning. Also, you may not be able to do this if your car has a sudden mechanical issue. All too often people let little things start going wrong on their car before they trade it in. This could include little annoyances and quirks that give a car personality for its current owner but decrease the car’s value in the eyes of a dealership or new owner.


    One of the best ways to achieve this feat is to read what other people who own your car have to say. There’s almost certainly someone who’s driven a copy of your car more than you have. They’ll be able to report when certain mechanical issues occur. For example, if you know that your car’s make and model type tends to need a new transmission around 65,000 miles, then you’ll want to trade it in at 60,000 miles or sooner, before any of these issues start occurring. That lets you get a higher grade for the car and makes it easier for the dealership to resell the vehicle.


    As you can see, there’s a lot of steps you can take to make sure you get the most value possible for your trade in. Don’t let yourself be suckered into accepting less than your car is worth. Use the information in this guide to negotiate the best possible price for your trade-in car. That will save you money on your new car and also save you money on interest if you still need to take out a loan to cover the cost of your new car. Trading in your car for less than its worth is just giving money away.


    There’s a lot of questions when it comes to trading in your car. Things like unpaid car loans, car leases, and poor credit can leave you feeling helpless and frustrated. Thankfully, we can help you better understand what you can do in your situation including getting bad credit auto loans. In this section, we attempt to answer as many of your questions as we can.

    General Car Trade-in Questions

    If you have general questions on trading in your car, this section is for you. Read on to answer your general car trade-in questions.

    How to trade-in a car?
    A car can be traded in by negotiating your car’s trade-in value at a dealership and then using that value towards buying a new car.
    What is the trade-in value of my car?
    A car’s trade-in value is the money the dealership is willing to give you towards your new car. This value comes from your car’s make, model, age and condition.
    How to trade in a car with negative equity?
    When trading in a car with negative equity, you’ll have to pay the difference between your car loan and your car’s trade-in value.
    How to trade in a car that is not paid off?
    A car that hasn’t been paid off can still be traded in. The amount you owe will be subtracted from your car’s trade-in value.
    How does a car trade-in work if you still owe?
    Despite owing money on your car loan, you can still trade in your car. The money you owe will be deducted from your car’s trade-in value.
    How to trade in your car for a cheaper one?
    When you trade your car in for a cheaper one, the dealership will give you a check with the remaining amount from your car’s trade-in value.
    How much is my car trade-in worth?
    Your car’s trade in value is calculated by considering your car’s age and condition. You can negotiate with you dealer how much your trade-in value is.
    How does car trade-in work?
    During a car trade in, you give your car to the dealership and buy a new one, using your car’s trade-in value towards your new car.
    How to trade in a car with a loan?

    When trading in a car with a loan, the loan will be subtracted from the car’s trade-in value. The difference will be applied towards your new car. Look at used auto loan rate before you shop.

    Where can I trade in my car?
    You can trade in your car at any local car dealership.
    When should I trade in my car?
    It’s best to trade-in your car before it reaches 50,000 miles as this is when your car’s value begins to fall and increased repairs are needed.
    How to trade in a financed car?
    When financing, a car can still be traded in. Any amount you still owe will be subtracted from your car’s trade-in value.
    What happens when you trade in a car?
    When you trade in your car, the dealership keeps your old car and you buy a new one. Your old car’s trade-in value is applied towards your new car.
    What do I need to trade in my car?
    To trade in your car, you’ll need the car’s paperwork (Car title, car loan paperwork, etc), your car, and a desired car to trade in for.
    How to trade in an upside-down car?
    An upside-down car (where you owe more than its value) can be traded in, but you’ll need to pay the difference between the value of your car and how much you owe.
    How to trade in a car with negative equity and bad credit?
    When you have bad credit, most dealerships won’t trade-in a car with negative equity unless you pay the negative equity in full at the time of the trade in.
    What paperwork do I need to trade in my car?
    You’ll need to have the car title, car loan paperwork and keys. The car’s maintenance records should be included to establish the condition of your car.
    How to trade in a car with a lien?
    Most cars that are traded in have liens on them. When you trade in your car, the lien amount is subtracted from your car’s trade-in value.
    How soon can you trade in a financed car?
    A financed car can be traded-in any time, even immediately after financing it. However, the value of your car goes down quickly after buying it (while car loan debt still remains).
    How to trade in a car with bad credit?
    Trading in a car with bad credit is possible (with higher interest rates), as long as the car’s value is greater than the remaining car loan balance.
    What if my trade in is worth more than the car I'm buying?
    If your trade-in car is worth more, the dealership will give you a check with the remaining amount left over.
    How often should you trade in your car?
    You should trade in your car while it’s still above the 50,000 miles mark. This way, repair bills don’t become too high, and the trade-in value is still high.
    How to calculate car payment with trade in?

    Calculate your car payment by subtracting your car’s trade-in value from the new car’s price and then dividing that over the span of months you wish to pay. Use a car loan payment calculator for this.

    How much does it cost to trade in a car?
    The only cost is the price of the new car you choose. Your car’s trade-in value is subtracted from the new car’s price.
    At what mileage should I trade in my car?
    Typically, you should trade in your car before it hits 50,000 miles, as this is when your car’s value begins to decline, and more repairs are needed.
    When you trade in a car, how long does it take to be paid off?
    The amount of time it takes to pay off depends on the payment plan you set with your dealer. For example, you can choose to make payments for 3 years or 5 years.
    How to trade in a car with payments left?
    Despite having payments left, your car can still be traded in. The amount of payment that’s left is simply subtracted from your car’s trade-in value.
    What is a trade-in allowance for car?
    A trade in allowance, or trade-in value, is the amount of money a dealership is willing to give for your car when you trade it for another car.
    How to estimate trade-in value of car?
    You can estimate your car’s trade in value with sites like Kelly Blue Book or Edmunds, which provide a value based on the make, model and condition of your car.
    How to trade in your car without paying anything?
    To avoid paying any additional fees, you can trade in your car for another car whose price is the same or less than your car’s trade-in value.
    What happens to my car loan if I trade my car in?
    When you trade your car in, the dealership pays off the loan for you and subtracts the loan amount from your car’s trade-in value.

    Negotiating Your Car Trade-In

    To get the best out of trading in your car, it’s best to go in knowing a few tips to help you negotiate. While car dealers have an idea of how much your car is worth, it’s never set in stone, and a bit of negotiating can earn you some extra cash.

    How to negotiate a car trade-in?

    You can negotiate best if you know your car’s estimated value (through sites like Kelly Blue Book or Edmonds) to know if you can ask for a higher price.

    What book do car dealers use for trade-in values?

    Sources like Kelly Blue Book and Edmunds are commonly used by dealers to get a general value of your car, although the actual value the dealer offers will vary.

    What site do car dealers use for trade-in value?

    Car dealers can use difference sources to get an idea of your car’s trade in value. The most common sources are Kelly Blue Book and Edmonds.

    How much over trade-in value should I pay for a used car?

    The trade-in value is used when trading a car in at dealerships. When buying a car, you can get a better estimate on how much you can pay for a used car on sites like Kelly Blue Book.

    How to negotiate buying a car with trade in?

    The best way to negotiate a trade in is to negotiate the trade-in value and the new car’s price separately. Also, it’s best to research your car’s suggested trade-in value prior to negotiation.

    How to prepare your car for trade-in?

    To prepare your car for a trade in, ensure your car is clean to appear well-cared for. Second, make sure you keep maintenances logs, so the dealership can know your car’s condition.

    When is the best time to trade in a car?

    The best time to trade in your car is when its value is higher than your remaining car loan and when it has less than 50,000 miles.

    What do car dealers use to determine trade-in value?

    Car dealers make their own assessment of your car’s condition, and they use sites like Kelly Blue Book or Edmunds to get an estimate of the value of your car.

    Other Questions About Trade-Ins

    There are a few other frequently asked questions when it comes to trading in your car, including questions on sales tax, leased cars and selling your car:

    How to buy a car out of state with a trade-in?

    Ask your local dealership how this can be possible. Often, dealerships might be able to bring in cars from out of state to do your trade in.

    Where can I trade in my car for a motorcycle?

    Usually, your car can be traded in for a motorcycle at a dealership that sells both cars and motorcycles. It’s best to call and ask if they offer this type of trade-in.

    What car has the best trade-in value?

    Cars that keep their value over the long run will have the best trade in value. Additionally, car’s that are better maintained and in better condition have higher trade-in values.

    How is sales tax calculated on a car with a trade-in?

    In a few States, sales tax applies to the full price of the new car. In most other states, sales tax only applies to the difference in trade-in value and the new car price.

    How much money do you lose when you trade in a car?

    The amount you’ll lose depends on the car and how fast it depreciates in value. To get an idea, visit a site like Kelly Blue Book to see how much your car will be worth.

    Where can I trade my car in for cash?

    If you’re looking to get cash for your car instead of trading it for another car, most car dealers are willing to buy your used car and pay you cash.

    How long do you have to wait to trade in a car you just bought?

    You can trade in your car immediately, although your car’s value lowers considerably after driving off the lot. This makes your car loan higher than your car’s actual value.

    When you trade in a car do you pay sales tax?

    In most states, you only pay sales tax for the difference between your new car price and your car’s trade-in value. In other states, you pay the full sales tax of the new car.

    How to trade in a leased car early?

    To get out of your lease, you’ll have to pay the remaining payoff amount in your lease. When trading in your car, this amount is subtracted from your car’s trade-in value.

    How do car leases work with a trade in?

    Trading in a leased car is much like trading in a financed car. With a leased car, your remaining payoff amount from you lease is subtracted from your car’s trade-in value. Also read our leasing vs buying a car guide.

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