By Lauren Fix, The Car Coach
When is the best time to trade in your car?
Several factors affect the trade-in price. You will get less trading from your car than selling it yourself. The dealership needs to make a profit on that vehicle. Being aware of what they are can help you set your expectations for the right price.
I’ll explain.
When is the right time to trade in your vehicle? Some people base it on mileage alone. They try not to put too many miles on their car not to hurt its value when the time comes to trade it in.
But your car’s mileage may not matter as much as you think.
The value of your car drops slightly with every 10,000 miles you drive. According to Edmunds.com and other auto-related auto websites, there is no significant drop-off at any specific mile marker. Even the 100,000-mile mark is not a value-killer as long as the car is in good shape. This is especially true with today’s shortage of vehicles.
The truth is, there is no magic number.
What matters more is the model year. If your car is only a few years old, it will likely retain 60 percent (or even up to 70 percent) of its original value. This remains true even if you drive more than the average mileage of 12,000 miles per year. Cars that are five years old or older, well maintained, and in good shape will retain value and often resell more quickly than newer ones in lesser condition. Obviously, the longer you have a car, the more it will depreciate.
When a car is between five to seven years old, the decline in its value slows and mostly settles. So if you didn’t trade it in during the first five years of ownership, there’s not much reason to rush to do it before the car turns eight years old. You’ll get about the same amount of money back if the mileage has not skyrocketed.
I do not recommend trading in your vehicle if you still have a balance on the loan and have not yet earned any equity, which means you still owe more money than the car is actually worth or underwater on the loan. With the average length of car loans increasing in recent years, this is becoming more common.
Instead, reach out to your creditor to determine how much you owe on the loan. Compare the estimated value of your car on a trade-in, then figure out when its value is higher than the amount you owe; consider that as a time to sell or trade-in your vehicle. Keep in mind that your car declines in value with each passing year and each additional mile. Now you’ll have something to put toward buying a new vehicle.
To get the most value on your trade-in, clean the car, get the maintenance records and take out personal items. A vehicle in good shape will command a larger sum than one that needs multiple repairs and damage. The best thing you can do for your car’s value is to maintain the vehicle inside and out.
Bottom Line
If your vehicle needs repair and the repair cost is more than the car’s value, sell the car and find a better one. Never invest more into a car than its worth. If you do, it will take many years to recoup your fees. Don’t throw good money after bad.
Lauren Fix, The Car Coach®, is a nationally recognized automotive expert, analyst, author, and television host. A trusted car expert, Lauren provides an insider’s perspective on a wide range of automotive topics and aspects, energy, industry, consumer news, and safety issues.
Lauren is the CEO of Automotive Aspects and the Editor-in-Chief of Car Coach Reports, a global automotive news outlet. She is an automotive contributor to national and local television news shows, including Fox News, Fox Business, CNN International, The Weather Channel, Inside Edition, Local Now News, Community Digital News, and more. Lauren also co-hosts a regular show on ABC.com with Paul Brian called “His Turn – Her Turn” and hosts regular radio segments on USA Radio – DayBreak.
Lauren is honored to be inducted into the Women’s Transportation Hall of Fame and a Board Member of the Buffalo Motorcar Museum and Juror / President for the North American Car, Utility & Truck of the Year Awards.
Check her out on Twitter and Instagram @LaurenFix.
