Trade-in: leaving your old car with the dealer

A trade-in is really two contracts: you sell your car to the dealer, and he sells you his. Because both are on one sheet, the money can be shifted freely between the two lines — a generous trade-in price can be paid for with a smaller discount, and vice versa.

So negotiate in two steps: first the price of the car you are buying, as if no trade-in were involved, then the price for your old one. How to negotiate that first figure is covered in the guide on negotiating.

A dealer calculates backwards. He estimates the price at which he can resell your car and deducts what arises before then: reconditioning, repairs, new tyres or a service that is due, the liability he takes on towards his customer as a commercial seller, the capital tied up while the car stands, and his margin.

If your car does not fit his stock — a small car at a dealer for luxury models, an old car with high mileage — he sells it on to another dealer or through an auction, and then he calculates with the price he gets there. A trade-in price below the private market price is therefore not a rip-off but the result of that calculation.

A private sale usually brings more, but it asks something of you: a listing and photos, answering enquiries, appointments with strangers, test drives, the risk of a payment scam and possibly a dispute after the sale if there is a defect. Add the gap between selling and collecting the new car, during which you are either without a car or insuring two.

With a trade-in, all of that disappears: one appointment, one signature, the old car stays, the new one leaves with you. Be honest about how much that is worth to you. For some people it is most of the difference, for others almost nothing — and if you want to sell privately, you can list on Carvexia free of charge.

Compare offers from different dealers not by the trade-in price but by what you pay on top in the end: price of the new car minus the price for the old one. A dealer who offers little for your car but gives a lot on his own price can be cheaper than one with a dazzling trade-in offer.

To place your old car you need a reference of your own. Look at the prices at which comparable cars are currently offered — same model, similar mileage, similar year — and deduct what a dealer would have to invest before reselling. The result is the range in which a fair trade-in price lies.

A single trade-in price is not market information but an offer. Get two or three, from dealers who can use your car in their stock — a dealer for that make often pays more for a well-kept car of that make than one who has to pass it on.

A price given without seeing the car is always subject to seeing it. Expect it to move afterwards, and compare offers only once they rest on the same basis: same mileage, same information about defects, car inspected.

The dealer values what he sees and what he is shown proof of. A washed car with complete documents, all the keys and a full service history is assessed differently from one where every question gets “I would have to check”. Small defects that are cheap to fix are often worth sorting beforehand; big ones rarely.

And say what you know. A dealer also relies on your statements about accidents, defects and mileage, and in the contract they stand as your representations. A concealed defect that turns up during reconditioning costs you more than one disclosed openly at the valuation.

Weeks often pass between contract and handover, especially if the new car still has to be delivered. During that time you keep driving the old one. Record in the contract the mileage and condition at which you will hand it over, and what applies if something happens in the meantime — otherwise it gets revalued at handover.

Also clarify what happens if delivery of the new car is delayed: does the trade-in price still stand, or does it expire? A trade-in price with a date is common, and the date should match the delivery time.

If the old car is still financed or leased, it may not belong to you alone. A dealer can settle outstanding finance directly with the bank and offset the rest; for that he needs a written settlement figure from the bank. Under a lease, the leasing company decides whether and at what price the car can be bought out.

The sequence and the pitfalls are described in the guide on buying a financed car — from the other direction, but with the same paperwork.

In the end there is a simple calculation: the extra proceeds of a private sale against the effort and risk it brings. Both can be estimated, and the estimate turns out very differently depending on the car and your circumstances.

Whether a private sale is worth it depends less on the car than on your situation. A rough orientation that holds up in practice: