Financing Your Next Vehicle

NADA Guides Estimate

You want to use your old car as part of the down payment for a New vehicle, but are uncertain which option is right – doing a dealer trade-in, or selling on your own privately.

Own or Lease

Do you own or are you leasing the vehicle to be traded?

  • If you own, Keep Reading.
  • If leasing, contact the lender to find out your options to terminate the lease.

For Vehicle Owners

Going online is the quickest, easiest way to estimate the value of your trade.  There are several websites that can help – two of the most common are KBB and NADA.  Both sites ask for basic information about the vehicle such as age, mileage, condition, trim level, and garaging location. After entering a few details you will get an estimate of the fair market value and trade-in value*.

  • Fair Market Value – this is the amount you might reasonably expect to receive if selling privately
  • Trade-in Value – this is an estimate of what a dealer will offer to buy the vehicle; trade-in values are usually lower than selling privately

Clean Your Car before trading or selling

Regardless of whether you sell or trade, give your car a thorough cleaning beforehand or have it professionally detailed. A little elbow grease can make your car more attractive to dealers and buyers, and have a positive impact on the value.

Do you owe Money?

Do you still owe money on the old car? If so, you will need to find out the current payoff amount and a good-thru date.  If you financed through a bank or dealership, this is as easy as visiting the dealership or bank.  Compare the estimated value to the payoff in order to determine your equity.

  • Positive Equity – fair market or trade-in is greater than the payoff
  • Negative Equity – fair market or trade-in is less than the payoff

Selling The Car or Trading it In

Selling the car yourself may be the way to get top dollar, but will require more time and effort. You will have to advertise, arrange test drives, negotiate a price, confirm payment from the buyer, and assist with the transfer of title.

Trading is easier and more convenient because in one visit the dealer can take care of the paperwork for both the old car and the new car.  A dealer may also be able help provide finance options in the case you have negative equity.  Just remember, if you owe money on the trade, getting a new car must include paying off the old car.

Selling or trading is a decision of what makes the most sense, and cents!

*The terminology may vary by site.  For example, Fair Market Value is referred to as the Private Party by KBB, and Retail Value by NADA.