Trade in your car when it has positive equity, market conditions are favorable, and before major warranties expire. Ideally, aim for when the car is two to three years old with 30,000 to 40,000 miles. Timing these factors can maximize your trade-in value.
The best mileage range to trade in a car is often between 30-40,000 miles or between two and three years old, before your new car warranties expire. You're more likely to receive a higher trade-in appraisal when it has fewer miles on it and more of its warranty left .
How long do you have to wait to trade in a car you just bought? There is no required time to wait to trade in a car. Ideally, you might wait until you've paid off your loan or at least have positive equity before you trade in your car. Otherwise, you're almost certain to lose money on the deal.
So, you can find out the value of your car and sell it to the dealer without thinking about your credit. If you are selling or trading in your car for another model, though, and are planning on financing, the inquiry process can impact your score. However, the vehicle trade-in itself carries no weight.
When Not to Trade In a Car. Although there are exceptions to this rule — as there are for most rules — don't trade in a car that is worth less than what you owe. In other words, if you get less when trading it in than the loan payoff, don't do it.
You can trade a financed car at any point, but you may want to consider waiting a year or more. This is due to depreciation, which can see a new vehicle drop as much as 20% in value during the first year of ownership. However, if you have negative equity on a vehicle, you can still move forward with a trade.
Legally, you can trade in your car under loan at any time. Whether you should trade in your car after a year or 2 years depends on how much money you stand to lose or gain.
30,000 To 40,000 miles
Your vehicle depreciation will generally start to accelerate more quickly after this milestone, so the nearer your vehicle is to these miles, the better your trade-in appraisal will usually be.
Most traders will start by choosing one longer timeframe and another shorter timeframe. As a general rule, traders use a ratio of 1:4 or 1:6 when performing multiple timeframe analysis, where a four- or six-hour chart is used as the longer timeframe, and a one-hour chart is used as the lower timeframe.
Telling a salesperson upfront that you have a trade-in adds another ingredient to the car-buying stew they'll cook up for you. The more numbers you have in the game, the more chances they have to manipulate the final price or monthly payment.
Often, it's best to pay down or pay off your auto loan before selling it or trading it in. The main concern is whether you have positive or negative equity on your loan. With negative equity, you should pay off your auto loan before you trade in your car.
If you don't like the car, you can exchange it for one you like or get a refund. In addition, some dealerships have exchange programs where you have a limited number of days to exchange the vehicle. Remember that excessive depreciation or putting too many miles on the car could prevent you from returning it.
Yes, you can trade in a financed car, but you still have to pay off the remaining loan balance. However, this is not as intimidating as it sounds.
You might want to delay your trade-in if: Your loan is fairly new: Cars depreciate as soon as they leave the dealership. If you recently took out a loan, you might still be upside down, where you owe more than the car is worth. In this case, it's best to wait until the loan balance is lower before you trade in the car.
Positive equity occurs when the resale value of your vehicle exceeds the total loan amount. Let's say your car's current resale value is estimated at $15,000, and you still owe $8,000 on your auto loan. In this scenario, your car's positive equity would be $7,000.
60,000-70,000 miles: Most manufacturers' powertrain warranties expire in that range, and the second major maintenance is scheduled to occur. Selling before reaching those benchmarks will get you a better price for your car than selling afterward.
Even if your car continues to run well, it's generally worth less once it's reached 100,000 miles. Your car's depreciation is significant at this point, and you likely won't get as much for it. Most dealers cannot resell a trade-in as a certified pre-owned vehicle once it reaches 80,000 miles.
Generally, you will want to wait a minimum of two years before trading in your vehicle because it will help compensate for that depreciation that happens right after it is driven off the lot. All cars lose about 10% of their value when they are driven away after a purchase! Two years is a general guide.
In most instances, yes, you can trade in a car with a loan, and some dealers might roll your remaining balance into a new loan. But trading in your car doesn't make your loan disappear. You will still have to pay off the remaining loan balance that your trade-in amount doesn't cover.
One way to get out of a car loan is to sell the vehicle privately. If you're not upside down on the loan, meaning the car is more valuable than what you currently owe on it, you can use the proceeds of the sale to pay off the current loan in full. Another term for an upside-down car loan is negative equity.
Your credit score won't impact the trade-in value of your car, but it will affect the interest rate you're able to get on the next vehicle you buy. Check your credit score before you begin the process, and if it's in the mid-600s or below, consider taking steps to improve your credit before you continue.
Note: If you're selling a car with an active loan, you're still the one responsible for paying it off, so the remaining balance on the loan will likely be subtracted from the price the dealer offers you. So if you owe more than what the dealer offers, you'll need to pay the difference to the lienholder.
Trading in a car itself doesn't impact your credit, but the credit check and new loan might affect your score.