While the types of vehicles available for purchase are becoming more high-tech and specialized, trading in your old one to save on your new ride is still a great strategy. Dealerships across the province are seeking good used cars and are willing to pay more than before for your trade-in. So, what is your car worth? Let’s examine how to find out about how much your car trade-in is actually worth.
What does car trade-in value mean?
When you buy a new vehicle and sell your current vehicle to the dealership as part of the deal, this is called a trade-in. Almost always, the trade-in value a dealer offers for the car is less than the amount you can get by selling it yourself, also known as the market value.
How to determine your vehicle’s trade-in value
It’s not only the listed price of an automobile that matters – it’s essential to know what it sold for. Using a car trade-in calculator, you can get a realistic idea of how much your car is worth based on the price that similar models are sold for in your local area.
Before you use the calculator, you should know the following:
- Make, model, year, and trim
- Upgrades or specific features
- Mileage
- Postal code
Factors that impact your car trade-in value
Your used-car trade-in value depends on several factors, including mileage and condition. Discover how car value can decrease and how to keep yours high. Here are a few factors that go into determining used car trade-in value:
1. The age of your trade-in
With some exceptions, cars tend to depreciate rapidly. They often lose about 20–30% of their value in the first year and may end up at about 40–60% of their original value after five years. However, the exact rate varies widely by vehicle and market conditions.
2. The mileage on your trade-in
Low mileage can tip the balance in favour of an older trade-in.
3. The overall condition of your trade-in
Regardless of age or mileage, condition plays a significant role in your used-car trade-in value. Dealers assess the cost of repairing or replacing the components needed to sell the car at a strong price. Additionally, they’ll deduct that from what otherwise could have been a decent offer for your trade-in.
4. The history of your car’s maintenance
You can improve your chances of the highest car trade-in value if you have maintained it according to the manufacturer’s schedule in your owner’s manual. Be sure to keep the paperwork from every visit.
Other important factors include:
- The equipment in your car: Pluses at trade-in time are an automatic transmission, upgraded factory audio systems, automatic climate control, power seats, upgraded upholstery, and sunroofs. In colder climates, all-wheel drive, heated seats, and heated steering wheels can also increase value.
- Current demand dictates the deal: Other factors to consider beyond equipment are neutral paint colours sell best, while models that sold poorly or a make that’s gone out of business are less desirable. Climate also plays a role: convertibles are likely to be much stronger in the Sunbelt than in the Snowbelt, while cars with good gas mileage can be worth more in regions with higher fuel prices.
- Make a good impression at trade-in time: Clean the car, vacuum it, remove personal items, and have it professionally washed. A complete detailing of the exterior, interior and engine bay might be an even better idea. It conveys a well-cared-for car and can easily pay for itself at trade-in.
What is the current market looking like?
In Ontario, average used-car prices have recently begun to decline modestly from prior highs, with listings for cars, SUVs, and trucks showing declines annually. Overall, used-vehicle prices are around $37,449, a roughly 5–6% decrease from previous years. Moreover, transaction prices have been declining and are among the most significant in Canada. However, even with these declines, many used vehicles still trade at prices higher than before the pandemic, and demand remains strong for reliable models in good condition.
Car trade-in value and resale value are not the same thing
One important thing to remember when you’re selling or trading in a vehicle is that your car’s resale and trade-in values are not the same thing.
- A vehicle’s resale value is what it is deemed to be worth in the retail marketplace, whether it’s being sold privately or by a dealership.
- A vehicle’s trade-in value is the amount you can expect a dealer to pay you when you trade it in against the purchase of another car.
The trade-in value will almost always be lower than the resale value because dealerships will often offer you a figure very close to wholesale value, or the low end of any estimated trade-in values you see online. They will then list the vehicle for sale at a higher price. Just to let you know, if you decide to trade in your car, there is no set trade-in value. The amount offered may vary based on the vehicle model, dealer inventory, and the dealer’s ability to resell the vehicle.
However, trading in your vehicle directly with local dealerships lets you see not only what they will offer, but also their current inventory and similar models for price comparison.
Other car trade-in resources
One of the easiest ways to determine your car’s trade-in value is to check online. Here are some resources to find out your value in the comfort of your home:
- Since 1955, Black Book has been the best-known provider of vehicle values in the automotive industry. They provide relevant, accurate vehicle pricing information at no cost.
- Carfax Canada: Another helpful resource is the Carfax Canada value range estimate tool, which provides high, low, and average values for your vehicle based on the information you provide about the vehicle.
- AutoTRADER offers an online tool to compare the costs of trading, buying, or selling your vehicle.
- KBB (Kelley Blue Book) helps you compare prices for new and used vehicles and provides reviews and ratings. It also lets you factor in your vehicle’s condition, listing it as either Fair, Good, Very Good, or Excellent.
- Canada Drives: Canada Drives’ online Sell My Car tool is a convenient alternative to these more traditional resources. It will tell you what your vehicle is worth on the used market. The difference is that, with Canada Drives’ online sales model, you can apply that value as a trade-in toward your next vehicle.
Should I trade my car in or sell it privately?
While selling a car or truck privately will almost always get you more money than trading it in, that extra money comes at a cost. Selling a vehicle privately is time-consuming, requires detailed planning and documentation, and can even be quite stressful. You also have to schedule and coordinate times for interested buyers to view the vehicle and take test drives.
Are there any tax savings when I trade in my car?
One of the most significant benefits of trading in your car rather than selling it privately is the tax savings you realize. When you trade in your vehicle, the value automatically reduces the price you pay for your new car or truck. You only pay taxes on the reduced cost of your new vehicle.
Can I trade in my car for a lease?
Although down payments are not required when you lease a vehicle, using the trade-in proceeds can help reduce your monthly expenses. However, it won’t save you much on the interest charges. It isn’t recommended to use trade-in cash toward a lease because you’ll face a higher risk of loss if the vehicle is damaged.
Final thoughts on car trade-in
Even if you’re not actively shopping for another vehicle, regularly checking the trade-in value of your current car or truck is a wise habit to get into — especially if you want to optimize the value of the vehicle before it depreciates too much. Having that trade-in value in mind while you shop around will help you assess what you can afford. If you’re looking to obtain insurance for your new vehicle, contact one of our isure brokers today!
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