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What you need to trade-in your car

Father and son enjoy their new car
September 20, 2018

By Kathryn Pins

Getting a new car is fun and exciting. Getting rid of your old one is less exciting. Saying goodbye to your travel buddy can be emotional, but at the end of the day, you want to make sure you get the most for your old ride. We’re here to walk you through the trade-in process so you can go into the dealer with confidence and drive out knowing you got the best deal.

Focus on your new car first

Sometimes a dealer will want to give you an “all-in” price. This would be the price of your new car minus your trade-in. Avoid this tactic for transparency. First, work out the price of your new purchase.

My best recommendation for your new car is to get pre-approved for your loan before you visit the dealer so you know what your rate will be. Getting pre-approved lets you focus your time and energy on negotiating the best vehicle price. You won’t have to worry about figuring out your best financing because you already have that checked off.

Research is going to be key when negotiating a price for your new car and your old one. Do your homework on both cars using KBB, Edmunds or Alliant’s Car Buying Service powered by TrueCar® to get estimates. You’ll also definitely want to know the best cars for your money, so again, research will be key. Once you have negotiated the price of your new car and the value of your old one, you can get into the details of trading in the old one.

How the trade-in works: Car is paid off

If your car is paid off, bring the title to the dealer. It’s that easy. They will deduct the entire value of the vehicle from the sale price of the new car, which will lower the purchase price. With a lower price, you may be able to save on sales tax too.

How the trade-in works: You still have a loan balance

If you still have a loan balance, the process may depend on the amount you still owe on the car. Before stepping into the dealership, you’ll want to make sure you do not owe more than the trade-in value. If you do your research on the sites mentioned above, you can have a better understanding of whether you’re at risk of being “upside down” on your loan.

Loans that are “upside down” require a few more steps before you trade-in your car. Speak to your lender about two weeks before you plan to purchase your new ride. You may want to make a larger payment on your existing loan to get back to having positive equity. No matter what, it is best to have a conversation with your lender to see if there is anything you may need to know about your current loan.

When you head to the dealer, bring your lender information, including your last statement and payoff amount. You may be able to simply pull this information from your online banking site or mobile banking app. With this info, the dealer will be able to take possession of your vehicle and cut a check directly to your lender.

Other Important Tips

Whenever you change out a vehicle, you’ll always want to remember to inform your insurance agent, update your I-PASS or E-ZPass, and change out your parking stickers. The whole process may seem like a giant checklist, but in the end, it’s a pretty easy if you do your homework before stepping into the dealership.


Kathryn Pins is a marketing content specialist at Alliant. She’s passionate about finding and communicating meaningful financial information with Money Mentor readers. Kathryn is a saver who gets more excited about certificates and her Roth IRA than shopping. When she does spend her earnings, it’s on furthering her education, travel, unique experiences, and loved ones.