The United States has one of the highest car ownership rates in the world. For every 1,000 people in the US, nearly 800 own a car.
Not every American driver is currently driving the vehicle of their dreams, however. But if you own a car, there’s a good chance you can trade-in your car to upgrade to a newer, bigger, or nicer model.
Even if you have a car loan, trading in a vehicle may still be an option.
So how does trading in a car work? And when is it time to trade in a car? Keep reading below to find out now.
How Do Vehicle Trade-Ins Work?
If you want to buy a new car, you will usually have the option to trade in your car to the dealer you are buying from. Doing this streamlines the process of buying and selling into one transaction.
When you bring in your current car, the dealership will inspect it and give you a quote. The amount that they will buy the vehicle for will be deducted from the purchase price of the new car.
For example, if you want to buy a car that is $30,000, and the dealer will buy your current car for $8,000, then the $8,000 is deducted from the purchase price.
You’ll just need to pay the remaining $22,000 to purchase the car. Of course, most dealerships will offer auto financing if you don’t have the cash.
Is Trading in a Vehicle the Best Option?
Should you trade in your vehicle to buy a new one? It depends on why you are buying a new car.
Oftentimes, dealerships aren’t going to give you the best price on your current vehicle. While the process of trading in your car is very fast and simple, you are sacrificing some money.
If you were to sell the car on your own to a private buyer, you could likely sell it for more. But that comes with the work of cleaning the vehicle, listing it for sale, handling phone calls, showings, and so forth.
Many people are interested in trading in their vehicles when they move. They want to sell their car quickly, fly to their new home, then use the proceeds to buy a new car in their new location.
But if a car upgrade isn’t needed, you could be wasting a lot of money. A better option might be car shipping so that your current car is sent to your new home without having to drive it across the state or country.
To Trade or Not to Trade
Trading in a vehicle to purchase a new one is an easy process. Even if you have a car payment, you can still trade-in your car and get into something new.
But the convenience of a trade-in comes with trade-offs, as you likely won’t get as much as your car is worth. Make sure to think long and hard before making a trade-in to ensure it’s a good fit for you.
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