How Does Trading in a Car Work?

Posted Thursday, May 15, 2025

Trading in your car at a dealership can help you get rid of your old vehicle quickly while using the value towards the purchase of a new ride. This can help you sell and buy conveniently on the same day while potentially giving you a tax break. However, you must do your homework before getting to the dealership to ensure you get a fair price when negotiating with the dealer.

In this blog, we will walk you through the process of trading in a car at a used car dealership so you know how to get the best deal.

Trading in Your Car at a Dealership in 6 Easy Steps

When trading your old car, you will want to make sure you are getting the most value out of it. A good trade-in value can help you sell confidently while reducing the price of your next used car or helping you qualify for better auto loans. So, let’s explore some essential steps you must take before heading to the dealership:

Research

The first step when trading in a car is researching and determining its market value, which involves estimating its trade-in value and understanding how much you could potentially get by selling it privately. This knowledge provides a solid foundation for negotiating with a dealership and ensures you have realistic expectations about the offer you will receive for your car.

You can use multiple resources to determine your car’s trade-in value. Websites like Kelley Blue Book, Edmunds, and NADA Guides provide easy means to get an estimate for your old vehicle. You need to provide correct details about your car including its make, model, year, and mileage, to the website which will then generate an estimated market value based on current market trends and similar vehicles.

Whatever resource you use for determining your car’s value, make sure to provide accurate details of your car to get a more precise value. It’s good to get an estimate from multiple sources and compare them to get a more realistic value for your vehicle's worth.

When determining your car's trade-in value, don’t forget to factor in how much you still owe on the loan. If you owe more on the loan than the car is worth (negative equity), the dealership will usually pay off your loan but you'll likely need to include the remaining balance in your new car loan. Conversely, if you owe less than the car is worth, you'll receive equity equal to the difference between the car's value and your loan balance. Thus, considering your outstanding loan balance is essential when determining the trade-in value you can get a a dealership.

Clean and Prepare

Take the time to thoroughly clean and maintain the interior and exterior of your used car before taking it to the dealership. A well-presented vehicle will give the impression of good care and overall condition, leading to a better offer from the dealership.

Preparing your car for a trade-in doesn't mean spending a lot of money on unnecessary repairs or cosmetic upgrades that won't significantly increase its value. You should rather focus on thoroughly cleaning your vehicle and addressing major mechanical issues that could affect the car's value. A balanced approach will help ensure you focus on what is necessary rather than overspending on unnecessary detailing.

Gather all Necessary Documents

Now that your car is ready, presentable and you have the estimated trade-in value; the next thing on the radar is gathering the documents that a potential car dealership will require. Ensuring you have all the necessary documents will help you avoid delays at the dealership.

Some of the important paperwork you will need, includes your car’s title, registration, proof of insurance, driver's license, service records (maintenance history), owner's manual, and any documentation regarding additional features or accessories you may have added to the vehicle.

If your car is still under a loan, be ready to provide the loan account number and details about the remaining balance. This will help the dealership accurately calculate how much you owe on the car, allowing them to properly process the transaction and pay off the loan to the lender.

Shop Around

Get trade-in offers from multiple dealerships and compare them to secure the best deal. You don’t have to settle for the first deal you receive, rather, shop around to explore your options. Always be prepared to walk away if an agreement isn't satisfactory.

When comparing trade-in deals from different dealerships, don't just compare the highest quoted value for your old car. Instead, carefully examine the fine print to look for any hidden fees or additional costs associated with the trade-in, as these can significantly impact the overall deal, even if the initial trade-in value seems high. So, make sure to thoroughly go through each offer and choose the most appropriate one.

Use Dual-Value Negotiation

When trading in your car using dual-value negotiation, treat the negotiation of your trade-in value completely separately from the negotiation of your next ride price. This will help you ensure you get the best possible deal on both aspects by not allowing the dealership to leverage one against the other.

Negotiate the price of your next used car first, then separately discuss the best value for your trade-in, using your estimated values to support your desired price. You should estimate your next used car’s price, features, and condition to ensure you're getting a fair deal and not overpaying. Since dealerships usually start with low trade-in offers, you must have your own data and estimates ready to negotiate a better value.

Review and Finalize the Deal

Once you and the dealer agree on a price for your old car, you can officially finalize the deal by signing the paperwork. Make sure you know the trade-in value and understand every detail related to the new purchase. After the paperwork, you can hand over your old car to the dealership and take your new vehicle with you.

Why Trading in a Car at a Dealership is Beneficial

Trading in your old vehicle at a dealership can offer financial benefits, a streamlined process, and the opportunity to drive a newer car. A trade-in helps you lower your down payment and potentially qualify for a lower interest rate on a new car loan. It also has the potential to reduce sales tax. By enabling you to sell your old car and buy your next ride at the same place, trading in provides the convenience of a streamlined transaction.

Although a trade-in value may not always fully cover the price of your next used car, some dealerships can still facilitate the purchase by providing Buy Here, Pay Here financing options. These in-house car financing allow dealerships to loan you the money directly to buy a used car on their lot, even if your credit history is not ideal, making it easier to get into a new vehicle.

Trade in Your Car for the Most Value at Honest Autos

If you have poor credit and want to trade in your old car for the best price, you are in the right place. We at Honest Autos specialize in helping individuals with poor or no credit history get financing and accept trade-ins, making it a suitable option for your situation. Our flexible Buy Here, Pay Here financing and fair trade-in evaluations help you buy and sell your car faster in one place.

Get in touch with our team in Fruitland Park, Florida to learn how we can help you get the most out of your trade-in and purchase your next car.