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how do dealerships calculate car value

When trading in your vehicle, it’s important to know its value in order to avoid getting low-balled by the dealership.

It’s important to know that you’re more likely to get more money selling your car privately than trading it in. If you’d like to see how many bucks your car can bang for, check out our instant value calculator.

That said, knowing how to maximize your trade-in potential is valuable information. Continue reading if you would like to know how to get the most out of trading in your car at a dealership.

How Do Dealerships Determine Trade-in Value?

Dealers will consider the demand for the make and model of your car, as well as the condition of your vehicle including mileage, and any repairs needed to determine your car's trade-in value. Even washing your car can have an impact on the trade-in value, so make sure it looks and smells as clean as possible.

Your skill at negotiating a price will also play a role at determining its final value. Dealerships usually make low offers expecting car sellers to negotiate up. Use our value calculator to see how much your vehicle is worth!

How To Get Your Vehicle Appraised

The easiest and fastest way to get an appraisal for your car is at an auto dealership. The whole process takes about 30 minutes and will help you get a better understanding of your car’s value.

Additionally, there are free online calculators that can help you get an estimate of how much your car is worth without having to leave your home.

Here are just a few:

  • VehicleHistory.com - Car sellers can go to this site and type in the VIN number (only for cars from 1980 or newer) to get an estimate of what their car’s “true value” is.
  • VINAudit.com - This tool returns the estimated retail value of your car based on similar vehicles sold in recent months across the nation.
  • Confused.com - This tool helps you get informed about your car’s worth when negotiating a price with potential buyers.

How Can You Maximize Your Trade-in Value

person cleaning car thoroughly

Fixing your car before you trade it in will have an impact on its final trade-in value. Getting some repair work done like replacing damaged windows, fixing minor engine issues, switching out worn tires, and ensuring your maintenance is up to date will go a long way.

Having receipts of repairs or upgrades made to your vehicle may also help you maximize its value when negotiating with a dealership. Furthermore, a clean and detailed car is worth more than a dirty and poorly presented one.

Additionally, in order to maximize your car’s resale value you should avoid smoking in your vehicle, putting stickers on it, and using aftermarket parts.

How Much Money Do You Lose When You Trade In A Car?

Depending on when you decide to trade-in your car, you will lose at least 10% of the money you initially spent. If your vehicle is damaged at the time of trade-in, expect to lose a lot more.

To put things into perspective new vehicles depreciate about 10% the moment they are driven off the lot. Another 20% by the end of the first year, and about 10% more of its value every year after that.

If you bought a new car, it is best to wait at least 3 years before you consider trading it in. After the third year mark, depreciation slows down and you’ll be able to get a better value for your vehicle.


Get an Online Offer from a Junk Yard Near you

Why are car trade in values so low?

Typically trade-ins need to be reconditioned before a dealership can put it up for sale. The time and money they invest in getting the vehicle ready for the next customer is factored into their offer, which many times results in a lower offer than selling it elsewhere.

Do tires affect trade-in value?

If your tires are completely worn out, the dealer may try to use it as a bargaining chip to lower their offer. Getting new tires can help you get a higher trade-in value for your car but don’t expect a significant amount.