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How To Get the Best Trade-in Value for Your Car

Photo: Scott Crawford | Flickr

One of the great unknowns in buying a used car is what to do with your trade-in. Do you sell it yourself? Trade it in to the dealer? Or possibly donate it to charity? While value is set by strict IRS guidelines for charitable donations, you can control what value you get for your used car when it’s time to trade it in.

Steven Lang is a man who knows the used car industry inside out. In addition to covering the car industry as a journalist, he has been an auto auctioneer and car dealer for nearly 16 years. He has also been in charge of inspecting, appraising and liquidating over 10,000 vehicles a year for Capital One Auto Finance.

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His latest project is the Long-Term Quality Index. It’s a study begun in early 2013 that now has tabulated the long-term reliability results of over 748,000 older used cars, SUVs and trucks throughout the United States. It contains trade-in information from across the country.

For example, the index shows a Mazda5 usually is traded in with 97,004 miles, which is below the industry average of 126,654 miles. Trading in a Mazda5 with more miles could decrease its value. Also, you can see via the index that a Mazda5 has better than average reliability in the 2010 model year, which could also help its resale value.

Photo: Moyan Brenn | Flickr

Lang’s top tip for getting the most trade-in value is making sure your car is clean when being presented to a dealer. “A clean car always sells for more money. Make sure the vehicle is perfectly clean. You could add some value if it’s detailed for a high-end vehicle. Dealers look at how the vehicle is going to look on their lot. That’s their first and foremost concern. You want to have everything clean,” Lang says.

The next advice Lang offers is to document recent work done on your used car. “If you have any added value to the vehicle, such as you’ve recently done some expensive maintenance to it such as a new timing belt or if for a hybrid you got a new battery for it, that information with receipts will help you get a better value. You can get some level of compensation for that. It’s not going to be for the entire repair,” he says.

Dealers will be able to market the car to customers with the enhancements. There is an added value for a dealer when they don’t have to do additional work to a used car when it is traded in, Lang adds.

Cliff Wood, executive vice president of stores at CarMax, disagrees slightly with Lang’s suggestions. He says, “You might be tempted to take a spin through the car wash on your way to get your vehicle appraised. Save your time and cash. A car wash or last-minute maintenance will not impact the overall offer they make on the vehicle. What’s most important is the long-term maintenance and care of your car.”

Photo: Daniel Oines | Flickr

He adds, “To determine an offer on a car, most appraisers will look at mileage, the condition of the vehicle, the vehicle’s accident history and how well it’s been maintained, inside and out.”

Something that could hurt your resale value is the level of customization your used car has. As Wood says, “Even though you may enjoy personalizing your car, aftermarket modifications like larger tires or a unique paint color can narrow the market appeal, which in turn can lower the offer.” While you may not want to paint your used car before trading it in, restoring stock equipment like its original wheels could help.

Both men also say a mistake car sellers make is not knowing the true value of their used cars when it comes time to trade them in. “Always get a written appraisal from a company you trust. You can use online resources to provide general guidance, but know that these sites are not always accurate in estimating the offer you’ll get on a vehicle,” Wood says. Wood’s own CarMax offers appraisals, which are good for seven days and don’t require that you purchase a used car from the chain.

Another way to determine the value of your trade-in vehicle in your local market is to advertise it for sale on Craigslist. “See how many bites you get for a given price,” Lang says. “You’re testing the marketplace.”

Finally, the best value for your trade-in continues to be selling it on your own if your used car still runs. Lang says you should trade in a car not in running condition if a dealer allows it and has trade-in allowances that provide exaggerated value to your non-functioning used car. Also, he says cars with major issues like transmission or engine problems should also be traded in because private buyers don’t want to purchase potential headaches.

Otherwise, you are going to see more value by selling it yourself. Lang says the difference could be as high as 20 to 30 percent. “I would say 95 percent of the time you’re better off retailing it, even with problems,” he says. Make sure the car is running well. “Minor repairs that have a marked improvement in the performance are usually worth it,” he adds.

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