If you’re looking to buy a new car and need to sell your existing one, a vehicle trade-in is probably the easiest and most convenient option. Why? Because it can save you a whole lot of time and hassle looking for a buyer. Selling privately, you may get a higher price, but there is always more risk involved. Trading it in at a reputable dealership removes the many risks that you otherwise would come against.
What is a Vehicle Trade-in?
Trading in your car simply means offering a dealership the vehicle you have to sell in exchange for a credit towards a vehicle you want to buy.
How Does it Work?
Once you’ve found the car you want and made your decision to purchase, the dealership will evaluate your car for any dents, scratches and other cosmetic conditions.
A vehicle’s car trade-in value is determined using a number of factors such as condition, market popularity, mileage, additional accessories, and even the colour of the car’s exterior. You will be offered an amount for your vehicle that is in line with the vehicle’s M&M (Mead & McGrouther*) book value.
If the car you intend to trade-in is still under finance and the settlement value (the final amount still to be paid) is higher than the price you have been offered, then you need to pay in the difference.
The good news is that if a dealer offers you trade assistance (also known as deal assistance) you can add that offered amount to your vehicle purchase. This deal assistance amount helps to cover some or all of the settlement value of the new vehicle.
While a trade-in is a quick and convenient option to sell and buy a car, it still requires a similar amount of paperwork:
Proof of ownership of the car you’re trading in:
If the car is paid off, you’ll need a letter from the financial institution stating that you have no outstanding balance on the car.
If the car is financed, a settlement letter from your financial institution and registered credit provider.
Roadworthy certificate obtained from a vehicle testing station.
Notification of change of ownership (NCO) form submitted to the Department of Transport to notify them that the vehicle will have a new owner.
Service history book.
Maintenance and repairs receipts.
Existing warranty, service, and maintenance plans still in place.
Tips to Get the Most Value for Your Trade-in
When you’re on the market for a vehicle to replace your existing one, before searching for the make and model you’re after, consider these important tips:
Find out how much your car is worth. This way you know whether you’re offered a fair price by the dealership you eventually enter the trade-in deal with.
Before taking your car in to a dealership for evaluation, ensure your car is serviced and spic and span.
It might be worth spending some money on repairs to help you negotiate as high a price as possible. Any sign of a major accident will decrease the value of your vehicle, but it may not be worth the cost and it generally makes more money-sense to let the dealership recondition the car after the trade-in.
Shop around, especially if you have a well sought-after vehicle, you might find a dealership willing to offer you a higher price.
Pros and Cons
The main factors that provide the advantages of trade-ins are speed, convenience, and low risk
If you’re in a hurry to sell your car, trading in your vehicle takes just a few days. On the other hand, trying to sell your car privately would be a long and potentially painful process. From deciding where to advertise, setting up appointments, negotiating a fair price, doing the paperwork, and agreeing on payment terms.
Dealing with one person directly, the car dealer, allows a smooth flowing process – no unnecessary time waste with broken communication links. It also means there is less paperwork for you.
The dealer will handle the entire transaction from beginning to end, from settling the outstanding balance with the financial institution, to ensuring the vehicle is taken out of your name.
Once the trade-in is completed, the car is out of your hands and everything along with it belongs to the dealer. This is a good thing because any issues, mechanical or otherwise, are no longer yours to deal with should there be any comebacks from the buyer.
Dealing with a reputable dealership means there is no risk of being scammed in the process as you might potentially be within a private sale.
When you opt to trade-in your vehicle, you’re limited to buying a vehicle from that specific dealership. Therefore, it makes sense to trade-in your car at a car dealership that offers you a wide range of vehicles to choose from.
If your car is a very old model, you may be disappointed by the price offered should the dealership accept it as a trade-in. In this case, selling it privately is a worthwhile option.
A vehicle trade-in is an easy and convenient way to replace your existing car with a newer model. If you have a popular car that is in good condition, it’s a good option. However, if you have an old car or one that is in need of a lot of repairs, it might not be the best option for you. Besides, if you’re happy with what the dealership offers as credit in exchange towards the car you want, go for it!
When you buy a used car from Auto Pedigree, you get quality, value, and choice from a wide variety of vehicles at dealers nationwide. Take advantage of our deal assistance promotion and get more value from your trade-in vehicle.
Disclaimer: Auto Pedigree and the authors make no representations as to the accuracy or completeness of any information on this site or by following any link on this site. Auto Pedigree and the authors will not be liable for any errors or omissions in this information nor for the availability of this information.
*Mead & McGrouther is a publishing company involved in the publication of information of Passenger and truck specification namely Auto DataDigest available in book form on the South African market. They also publish the monthly issue of the Auto Dealer's Guide which is extensively used by the Car Dealers throughout South Africa.