How to ensure a fair price when trading in your car
Upgrading to a new car and needing to sell your old one first? Take heed of these tips
Trading-in an old car and upgrading to something new is really exciting, but can be rather daunting at the same time. Where does one start?
To sell privately or to trade-in?
Usually before you purchase your new car, you would need to sell your old car first.
The options are to either sell your car privately or ask the dealership where you plan to purchase your new car from to take your old car as a trade-in. It’s often assumed that selling one’s car privately will fetch you a better price and is therefore thought to be the obvious way to go.
When weighing up your options for this decision, however, here are a few points to consider, as provided by Imperial Auto:
- Where would you advertise it?
- How much could you ask for it?
- Are you prepared to manage the calls you will be receiving in response to the advert?
- Are you comfortable with complete strangers coming to your home and test driving your car?
- Are you prepared to get roadworthy certificates and change of ownership forms sorted out?
- Have you considered the risk of fraudulent payment or the possibility of being scammed by a would be “purchaser”?
If you do not want to deal with any of these niggly things, a much better option would be for you to trade the vehicle in.
What price can I expect?
Before taking your old car in, it will be beneficial to understand how a trade-in price is calculated and to understand some of the terminology you may hear.
Retail price: this is the price of the car when someone buys it from a dealer.
The selling price: the trade-in price plus the dealer’s profit/mark-up. If you sell privately, you will get the retail price.
Trade-in price: the price that the dealer will pay you for the car. This will go towards settling your vehicle finance or you’ll receive it as cash towards another car.
Book value: This is the industry-accepted dealer valuation value by TransUnion on which they will base their price.
Doing as much research beforehand will assist you in being more prepared to get the best deal you can. A good way to get a better idea as to the value of your car is to keep an eye on retail sites. It’s also a good idea to do research and call a few different dealers to see what the average price you could get for your car.
Remember that if your car has special features — such as a fancy sound system, leather seats and mags — you will be able to fetch a better price.
It is widely reported, however, that most cars depreciate at a rate of 15%–20% per year, and by year five, your vehicle will generally be worth half what you originally paid for it.
Taking the next steps
Once you have completed your research you will feel more confident and be ready to go to your chosen dealer to look at a new car and see what deal you can get as a trade-in for your old car. Don’t forget to make sure your car is clean and take your service book with (a full-service history will count in your favour).
Professional dealerships will be able to show you various options for a new vehicle while a professional valuator looks at your old car. The valuators will look at various factors that will affect the price they will offer including:
- Popularity of vehicle make and model;
- Year of first registration;
- Mileage (an average mileage of 25,000km per year is acceptable);
- Vehicle condition;
- Warranty, maintenance and/or service plans are intact;
- Service history;
- Any additional accessories or non-standard specifications; and
- Exterior colour of the car.
Once you are happy with the trade-in offer for your old car and have chosen your new car, you will need to provide a few things in order for the trade-in to go ahead:
- An SA identity document or valid driving licence;
- A bank finance settlement letter, to prove that your vehicle has been paid in full;
- Original NaTIS (National Traffic Information System) registration document if the car is paid up;
- Proof of residential address;
- Service handbook to prove service history;
- Both sets of car keys; and
- All extra items relating to your car, for example a tracking device.