Categories: Tips & Insights For Car Buying
How Much is Your Car Worth? 9 Factors That Determine Car Trade-In Value
Are you planning on upgrading your car? Well, one of the best ways to lower the cost of financing a new car is to offer your dealer a car trade-in.
Are you planning on upgrading your car? Well, one of the best ways to lower the cost of financing a new car is to offer your dealer a car trade-in. But what is this car trade-in? A car trade-in involves exchanging a used car for credit to buy another new car.
One thing to note is that the amount your dealer is ready to offer you for your old car depends on several factors. Here are the factors that determine car trade-in value:
1. The age of your vehicle
Cars depreciate rather rapidly. In most cases, depreciation occurs at a 20% rate every year. This depreciation means you can only claim about 60% of the original price after five years of car ownership. Also, the depreciation can continue to decrease as the years go on.
Therefore, the demand for your used car will decrease as it ages because of the depreciation. In that case, a newer car trade-in can fetch a higher price than an older one. Remember, the older your car, the more depreciation and the lower the price.
2. The features of your present vehicle
Some additional features that you have on your car can enhance its trade-in value by a considerable amount. For instance, if you add enhanced comfort and safety options like; power locks, power windows, automatic transmission, or a leather interior, your trade-in value will be much higher.
One thing to note is that aftermarket accessories may impact the trade-in value negatively. For instance, an expensive aftermarket stereo may appear like an incredible investment, but it will not get your money back.
Additionally, performance-based add-ons that affect safety and suspension features can nullify warranties, which is unsuitable for high valuation. Thus, not all vehicle additions can increase the resale value. If you intend to get a high trade-in value, make sure to avoid performance-based and aftermarket accessories.
In addition, your used car's popularity, make, and model also plays a crucial role in its value. If you own a classic popular car, you may be able to fetch a higher trade-in value.
3. The mileage
A vehicle's odometer can be a red flag or green light to any potential buyer. Even though your vehicle is still dependable, it may have a low trade-in value if it has 100,000 miles and above. In most cases, people expect cars with high mileage to have mechanical issues.
The US Department of Transport establishes that the average number of miles per car in a year in the United States is about 13,500. Anything below these average miles can be a significant point for you. Thus, the lower your vehicle's mileage, the higher the chances of fetching a high trade-in value.
This high trade-in value due to low mileage is because the higher the mileage, the more wear and tear. Furthermore, a prospective buyer is highly likely to pay more for a car with 30,000 mileage than one with 200,000 mileage.
4. The vehicle's maintenance history
Regular car maintenance is vital in increasing trade-in value and ensuring performance reliability. When considering a trade-in, make sure to bring any records of maintenance. A maintenance record, especially one that follows the manufacturer's schedule on brake jobs, radiator flushes, oil changes, and other services, increases the value of a trade-in.
This documentation shows the dealer or a private buyer the tender care you offered the car. It also proves that you took good care of maintaining the mechanical aspect of the car. Thus, make sure to always keep all vehicle maintenance records.
5. Exterior condition of your car
A dent, chip, or scratch can impact how an appraiser grades your car as Poor, Fair, Good, Excellent, or Bad condition. A single dent can make a massive difference between good and poor. This grading will impact the trade-in value of your car.
If the exterior condition of your car is fair, it will have less value than if the grading is excellent. Thus, depending on the damage's severity, you should consider taking the decreased value or repairing your car.
6. Interior condition of the vehicle
Food spills, pets, or smoking in your car can adversely affect a dealership's offer. In some extreme cases, it can go up by hundreds of dollars. Most individuals who buy used cars want a well-loved and gently used vehicle.
Trash piles and interior damages are not something that an appraiser will take lightly. This interior damage can significantly lower the trade-in value. If you want a higher value, clean your car deeply to remove stale smoke smells, pet hair, and stains.
7. Present market conditions
The market value of your car will also play a crucial role in the valuation. Like any other industry, forces of demand and supply impact the automotive industry. It means that when the demand is higher than the vehicle's supply, the valuation of your car will be higher.
Therefore, the trade-in's value will depend on the present condition of your vehicle and the overall demand. In addition, a model that went out of the market or sold poorly will be disadvantaged. Also, vehicles with incredible gas mileage can have a high trade-in value in areas with high fuel prices. Thus, make sure to observe what's trending in the market when you choose to make a trade-in.
8. The color package of your car
The color of your vehicle can affect its trade-in value. An automobile with a neutral hue, such as silver, white, or black, can give you a good return. It is because the neutral hue never becomes out of style. On the other hand, a limited edition coloring may seem like an excellent idea during purchase, but it may be hard to sell in the future.
If you intend to trade in your car in the future, go for a neutral color. This neutral color will fetch a higher trade-in value than limited edition colors.
9. The location of the trade-in
The location where you intend to make the trade plays a part in your car valuation. Generally, a family sedan is popular anywhere, meaning you can get a good trade-in value anywhere. On the other hand, sports cars and convertibles are best for warmer climate regions, like the coast.
In these regions, they can fetch a high value. Thus, when making a trade, consider the location and the type of car you have. The more suitable your vehicle is for a particular environment, the higher the value that you can get.
Getting the most appropriate car trade-in value is a procedure that starts after you purchase the vehicle. To get this high trade-in value, have a maintenance record, buy a car with a neutral hue, keep the mileage lower than average, and do not wait until it is old. Also, ensure that the interior and exterior conditions are excellent and check the market conditions first.