How to trade in your car

Trading in your car involves bringing your current vehicle to a dealership for a new one. Instead of paying for the new car in full, the dealer subtracts the trade-in value from the price tag. Like with most aspects of car buying, there’s some wiggle room to maximize how much you can get when you trade in your car.

How to trade in your car in 6 steps

Technically, all you need to do to trade in your car is bring it to a dealership, pick a new car and sign the paperwork. But you probably won’t get the best trade-in value. These steps can help ensure you don’t go into a trade-in blind and get a raw deal.

Step 1: Get an estimate of your car’s value

Start by getting an estimate of your car’s trade-in value online so you have a number in your head. Be prepared to have the following information on hand to get an accurate estimate. If your car’s been damaged in any way, you might want to take it to a mechanic to get it appraised, since its value might have been affected.

• Kilometres
• Model, model, trim
• Condition level
• Your postal code

Below is a list of some of the most popular car value estimator sites in Canada and what factors they use to calculate your car’s value before the trade in.

Car-value estimator	How it works
Canadian Black Book	Estimates your car’s value using Canada-wide data from car sales, auctions, brand equity, and what similar vehicles are selling for Requires your vehicle’s make, model, kilometres, year, trim and colour Offers estimates for your car’s trade-in value, average asking price and future value It is a reputable site that has been in business for over 50 years
Carfax	Estimates a car’s value based on sales of similar vehicles near you Requires your vehicle’s VIN or its make, model, year and trim Carfax also offers Vehicle History Reports for any used vehicle based on its VIN, which can potentially give you a more accurate value estimation and prevent you from buying a lemon
Auto Trader Canada	Estimates a car’s value based on whether you want to trade in, sell or buy Requires your vehicle’s make, model, kilometres, year, trim and condition (choose between excellent, good or fair condition) One of Canada’s biggest platforms for private vehicle sales, while also hosting listings from dealerships across the country
Kijiji	Allows you to see the price of similar vehicles in your are for any kilometre radius you set Narrow down your search using filters for the body type (e.g. hatchback, minivan, SUV etc.), make, model, price, year, colour, whether it’s being sold by a dealer or privately, its condition and many more features

Step 2: Calculate your equity

Already own your car outright? You can skip this step. If you’re still paying off your loan but want to trade in your car, find out if you have positive or negative equity by subtracting your loan balance from the trade-in value.

If you get a positive number, that means you have positive equity and might be able to get a better deal when you trade it in.

Step 3: Gather your documents

Dealerships typically ask to see several documents when giving you a quote, including:

• Car title
• Car registration
• Loan payoff amount more info button
• Loan account number
• Driver’s license

You also might need to bring all of the keys you have for the vehicle you want to trade in.

Step 4: Get quotes from a few dealerships

Do some research on dealerships in your area and schedule an appointment. Some dealerships might be able to give you a quote for your car’s trade in value over the phone or by email, while others might insist you bring in the car.

When you bring in your car, a used car manager will examine the vehicle before coming up with a quote. Even if a deal sounds good, don’t sign any paperwork until you’ve heard from other dealerships. Consider starting with a dealership that allows you to hold on to your offer while you shop around.

Step 5: Negotiate with your chosen dealership

Use the different car trade in quotes you received to negotiate a better deal at your chosen dealership. But don’t ignore the cost of your new car.

Research the value of each car you’re considering buying with your trade-in and use that to negotiate down the cost. Check out these tips for buying a new car which can help you make a smarter decision. If you think a dealership isn’t giving you a fair price on a used car, consider having the vehicle appraised by an independent third party.

Step 6: Close on your trade-in

How this step works can differ depending on whether you own the car or still owe money on it. If you own the car, trading it in is relatively straightforward. The dealer subtracts your current car’s value from the new car and you pay the difference. Or if you’re buying a car that costs less than the trade-in price, the dealer writes you a check.

What happens when you have a car loan depends on whether you have positive or negative equity. If your car’s trade-in value is worth more than your car loan balance, the dealer deducts the difference from the price of the new car.

If you have negative equity, you’re responsible for covering the difference between your loan balance and the trade-in price. You might be able to roll the negative equity into a new car loan, but that adds to the risk of going underwater on your next car loan. Pay it off in cash if possible to avoid an upside-down car loan.

Three tips for negotiating a good trade-in deal

Ready to trade in your car for a new one? Follow these pointers to get the best deal out there:

• Brush up on your sales tactics. Go into the dealership with an idea of what to expect so you don’t walk away convinced your car is worth less than it actually is.
• Negotiate the new car price first. Focusing on the price of the new car you want to buy can help you hone in on the difficult part before tackling the trade-in deal.
• Time it right. Dealers are often more flexible at the end of the month or year, when they’re trying to move cars off the lot.

How to trade in a car that is not paid off

If you want to trade in a car that you haven’t finished paying off yet, the dealership will evaluate how much your car is worth and apply any positive difference between your car’s value and your loan amount as a deduction on your new vehicle’s price. If it turns out that you owe more on your car than it’s worth, you’ll have to pay the remaining amount on your old car loan and you won’t get a discount on a new vehicle from the dealership.

How to roll over a car loan

If you still owe money on your old car loan, dealerships often suggest rolling over your old loan into whatever financing you secure to purchase your next car. While it can seem convenient to not have to pay off your old car before buying a new one, it also adds to the total amount you’ll need to pay back on your next loan. That can lead to getting into more debt than you can manage.

Instead of trading in a car and rolling over your car loan into a new loan, it might be worth waiting to trade in your car until you’ve fully paid off your car loan. Alternatively, you can look into selling your car privately instead of trading it in. You can often get more money for your car in a private sale than you could get when you trade it in at a dealership.

Sell or trade-in your car online

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Product CAFCL	Max. Vehicle Age	Mileage Range	Available Provinces	Vehicle Payment	Link
Clutch Sell or Trade Your Car	2000 or newer	Any	Ontario & Nova Scotia	eTransfer funds in 1 business day	Go to site More Info Compare	Sell or trade-in your car without the hassle. Upload basic information and get an instant offer. Get the vehicle picked up from your driveway. Available in Ontario and Nova Scotia only.	loading Fetching your data...

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Should I trade in my car?

Trading in your car takes a lot less time than selling it yourself. You won’t have to take it in for inspections, advertise it or make time to have prospective buyers test-drive it.

You also might be able to avoid paying sales tax on your new car, depending on where you live. Or you might only have to pay sales tax on the difference between your new car’s value and your old one’s.

Should I sell it to a private buyer instead?

If you want to get the most money for your vehicle, selling it to a private buyer might be a better choice compared to trading it in. Dealers tend to buy trade-in cars at wholesale value, which is less than the sticker price you’d get from a private-party purchase. If you’re not a skilled negotiator, your dealership could even pay you less than that wholesale price.

Ready to finance your next car after a trade in? Compare car loan options

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Product CAFCL	Ratings	APR Range	Loan Amount	Loan Term	Requirements	Broker Compliance
CarsFast Car Loans	Customer Survey: ★★★★★	3.90% - 29.90%	$500 - $75,000	12 - 96 months	Requirements: Min. income of $2,000 /month, 3+ months employed	CarsFast will connect you with a dealership near you to help you find the right financing.	Go to siteMore Info Compare	loading Fetching your data...
Loans Canada Car Loans	Customer Survey: ★★★★★	0% - 46.96%	$500 - $50,000	3 - 60 months	Requirements: Min. income of $1,800 /month, 3+ months employed	Loans Canada is a loan search platform. Get matched with a suitable dealer based on your credit history and borrowing requirements.	Go to siteMore Info Compare	loading Fetching your data...
Approval Genie Car Loans	Not yet rated	3.90% - 29.90%	$500 - $75,000	12 - 96 months	Requirements: Min. income of $2,000 /month, 3+ months employed, Ontario only	Get customized car loan and auto financing solutions for a used vehicle that fits your budget and lifestyle.	Go to siteMore Info Compare	loading Fetching your data...
Clutch Car Loans	Customer Survey: ★★★★★	From 8.99%	$7,500 - No max.	24 - 96 months	Requirements: 3+ months employed, Max.1 bankruptcy, Ontario & Nova Scotia only	Apply for financing with online dealer Clutch, who partners with some of Canada’s largest financial institutions to get you competitive interest rates.	Go to siteMore Info Compare	loading Fetching your data...
Dealerhop Car Loans	Not yet rated	6.99% - 29.99%	$7,000 - $50,000	12 - 96 months	Requirements: Min. income of $1,800 /month, 3+ months employed	Dealerhop matches you with a dealer partner to get you financing.	Go to siteMore Info Compare	loading Fetching your data...

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Bottom line

Taking the right steps when you trade in your car can help ensure you get a fair deal. But if you’re looking to maximize profits, consider selling it privately instead.

You can learn more about how car financing works with our guide to auto loans.

Frequently asked questions how to trade in a car

• Can I trade in a car if I have bad credit?

  You can, though you might not have as many financing options if you need to take out a new car loan to cover the difference. Otherwise, the dealership likely won’t run your credit since you won’t need to borrow to pay for your new car.

• Is it possible to trade in a leased car?

  You can — and you have a few options. You can sell your lease to the dealership in exchange for a new lease. Or you can sell your lease to a dealership and purchase a new vehicle. If the buy-out cost of your lease is worth less than the new car, you might have to cover the difference.

• Can I trade in a car I just bought?

  You can, but it might not be the best idea if you have a new car — you likely owe more money on the car than it’s worth since cars depreciate at a faster rate in the beginning. Research your potential trade-in value before you make a decision.

Written by

Anna Serio

Editor

Anna Serio was a lead editor at Finder, specializing in consumer and business financing. A trusted lending expert and former certified commercial loan officer, Anna's written and edited more than 1,000 articles on Finder to help Americans strengthen their financial literacy. Her expertise and analysis on personal, student, business and car loans has been featured in publications like Business Insider, CNBC and Nasdaq, and has appeared on NBC and KADN. Anna holds an MA in Middle Eastern studies from the American University of Beirut and a BA in Creative Writing from Macaulay Honors College at Hunter College, CUNY. See full bio

Anna's expertise

Anna has written 61 Finder guides across topics including:

• Personal, business, student and car loans
• Building credit
• Paying off debt

Co-written by

Jaclyn Hurst

Associate Publisher, Investments

Jaclyn Hurst was an associate publisher at Finder. She has a Bachelor’s degree in Business from Redeemer University and a University Certificate in Management Foundations from Athabasca University. She’s as passionate about business and finance as she is about the great Canadian outdoors, organic Sumatra coffee and music. See full bio