When is the best time to trade your car?
When the time comes for you to upgrade to a newer and safer vehicle, what are you to do with all of the money that you still owe on your current car loan?
Ideally, you want to be at or near the point of having equity in your vehicle. This is defined as the point where the value of your vehicle is higher than the amount you still owe on it.
So how do you find out where this magical point of equity is?
If you review your current invoice from your auto loan bank, it should display the payoff amount somwhere on the bill. This amount needs to be equal to or less than your current vehicle value for you to have equity.
So what is the current value of my vehicle?
There are many tools available online, like Kelly Blue Book, that help you determine an approximate value of your vehicle. However, it should be noted that these figures can often be a bit too generous as they cannot fully account for everything that a much more thorough visual inspection would cover.
Many dealers including the Knauz Autopark, obtain estimate used car values using many services including actual auction information of similar cars in the area. This provides average values for vehicles sold at used car auctions in the area and around the country, which is a more accurate representation of what your trade-in is actually worth.
Overall, the most accurate value you can get from your trade-in comes from visiting the dealership and having the Used Car Manager appraise the car. When the Used Car Manager can see and touch your vehicle, he or she can tell you exactly what you can expect to get for your trade.
So don’t be afraid to come down to the dealership to see what your current vehicle can be appraised for!
Some common points to considering when thinking of trading your vehicle in.
Should I trade-in or sell myself?
Either way is a matter of choice. Trading in your current vehicle is the quickest and allows you to take advantage of available tax savings on the new vehicle. Plus you will not have to worry about the cost of advertising your vehicles, having people come to your home to see and test drive the vehicle, having to have the vehicle repaired and completely detailed to ensure you get the highest possible price for the vehicle. Plus you won’t have to compete with other vehicles being offered for sale with warranties or possible manufacturer’s certification programs with special financing. Plus you don’t have to worry about the how someone is going to pay for your vehicle, is this check good? Can this person qualify for the loan they applied for? But if you can handle all of those issues and are willing to wait sometimes months for a sale… you will probably get more money if you sell that vehicle yourself.
Price trade-offs.
Would you rather have a monthly payment or face the possibility of occasional (and potentially large) repair bills?
Once a new car is out of warranty, you start playing Russian roulette with unexpected expenses.
Some cars are more reliable over time. Checking sources like Consumer Reports, J.D. Power and Associates customer satisfaction rankings and government recall data will give you a good feel for vehicle track records.
If you keep track of how much money you're putting into your car for upkeep, you'll be able to notice any expense trends that scream, "It's time for a new car." A $4,500 repair bill for an older car is the equivalent of more than seven months of $600-a-month payments on a new car.
Hassle.
How willing are you to deal with more frequent trips to the repair shop? The older the car, the more often you'll find yourself returning for both big repair bills and regular service. For some drivers, maintenance is a labor of love, but for others, it's just a hassle. And for those who live and die by reliability -- especially one-car families and people who need a car for work -- the maintenance challenges of an older car might be a bit much.
Newness.
This last factor is the most subjective, but it's no less important in your purchase decision. Some people are perfectly content to drive an older car, so long as it still runs well and is paid off. But others in some professions where it's important to be seen in a car that is a good reflection on themselves and the dependability of a newer car could be vital to their livelihood. .
