How to get more for your trade-in on a new car

Trading in a vehicle for a newer model can be unsettling for many consumers.

But against the 'known unknowns' of exchanging your used car for a new vehicle, there's the value of convenience – offloading the old vehicle for the desirable new car, all in the same transaction.

To avoid being disappointed with the trade-in value, first do some homework – some practical, some theoretical.

For starters, consider how your vehicle will be received at the dealership. If it's up to five years old and you're making an enquiry on a new car, the dealer may welcome your trade-in. Can it be easily sold off the lot rather than 'wholesaled'? That's on-selling the car to the automotive trade for whatever market value another dealer is willing to pay.

Once a used car is over five years old, its appeal to a dealer diminishes greatly. So bear that point in mind. It will affect the trade-in price.

Is your vehicle in good condition, or is it battered, faded and frumpy? Has it been regularly serviced, or has it been estranged from any servicing dealership since new?

If your current vehicle is generally neat, tidy and serviceable, the dealer will offer you a better deal on the sale of a newer car. If your current car is none of those things, it may cost more to buy the new vehicle if you inflict your old car on the dealer.

Have no doubt, if your car is not an acceptable candidate for trade-in, the dealer will quickly let you know, by offering an insulting trade-in value.

Prior to setting-off for the dealership, determine what your vehicle should be worth (to the dealer as a used car and to you when you sell). Be realistic.

Use tools such as redbook.com.au or carsales.com.au Instant Offer to get a feel for your car's trade-in value... what it is worth to others. You may think it's the best Daewoo ever shipped from Korea, but not everyone will share your view.

When working out a fair price for your old car, be conservative. If your car shows 'country miles' on the odometer, valuers will be put off by that. There's nothing intrinsically wrong with a car which has travelled 300,000 kilometres, provided it has been properly serviced, but a typical retail buyer won't have a bar of it.

That means it could sit on the dealer's used-car lot for a long time before attracting a buyer. And the dealer wants to sell cars quickly, hassle-free and cost-effective. The dealer's stock is there to sell, not just take up space.

An honest car with a few nicks and scratches may be great on a test drive, but it will still be 'average condition', not 'good'. But your own efforts to improve its presentation can help.

"Presentation is everything and a good clean and detail can make any car look as good as new," says Executive Director of RedBook Inspect, Mr Theo Cosmetatos.

Thorough cleaning can indeed do wonders. Use dedicated cleaning agents (‘clear cote safe’ cutting compounds, for instance, or glass cleaners containing no ammonia). A professional car detailer can usually remove imperfections in the clear coat of the paintwork for no more than a couple of hundred dollars.

But don't go to a lot of effort to fix past indiscretions, warns Mark Henham, Livesale Wholesale and Product Manager at carsales.com.au.

"Trading is about convenience. If you go to the trouble of reconditioning the car and getting a RWC (roadworthy certificate) et cetera, you might as well retail," he says.

There are numerous quick fixes for cars which are slightly dog-eared. Buy a set of wheel covers to replace the old ones scuffed by kerbs; at the same time, pick up a set of floor mats to throw over worn carpet areas.

Before submitting the car for valuation at the dealership, make sure you remove all rubbish from the boot, the glovebox, under the seats… everywhere. Do leave in the glovebox receipts to confirm work carried out over the years to keep the car in tip-top shape. Also, collect anything else which came with the car – spare key, stamped logbook, GPS CD-ROM, PIN for the audio system, et cetera. That's all very important, according to Mr Cosmetatos.

"Valuers are always looking to negotiate down the price if you don't have these items so it's well worth taking the time to track them down," he says.

If a roadworthy certificate [Pink Slip in NSW] can be arranged for a reasonable sum of money (no more than a few hundred bucks, depending on the car itself), that's another aspect which will convince the valuer to offer more cash for your clunker. But, if meeting the requirements of that Government certification requires repairs costing thousands, see what sort of deal is on the table without it. Be prepared for the worst though.

In a similar vein, balance the cost of repairs to the car against the likely gain in dollar value. Don't spend thousands fixing body panels when the dealer can fix the same accident damage for hundreds. That would be factored into the transaction price.

Now, about the dealer…

A dealer retailing the same brand as the vehicle you own will likely be more receptive of your car as a trade-in. The difference in value will vary greatly according to whether your trade-in is an 'orphan', a collectible or a well-regarded mainstream model.

One pitfall of trading your car to a dealer selling the same brand is that you're then locked in to buying a new car of that same brand, if you're buying a new car.

And we can't stress enough, if you are trading your car, be pragmatic. Comparing retail prices with the money negotiated by the dealer is likely to disappoint. Convenience comes at a price, where a car trade-in is concerned.

Be aware too that much of the offer made for your trade-in will be contingent on the profit margin for the dealer in the new car's retail price. Always look at the changeover price. One dealer may offer you less for your car, but the new car's price may be lower too.

"Shop around, not all dealers are competitive on trades," says Mark Henham. "Some have stronger used-car departments or are more aggressive at winning new business."

Good hunting.