Things happen that might prevent you from keeping your current SUV. You could be moving to a large metropolitan area, where even the thought of driving gives you ulcers, your family is growing so you need more space or you want something new. Whichever is the case, it leaves you with the question of what do you do with your current model?
The easiest way to offload it is to trade it in, especially if you plan to get a newer model. Dealerships are more than happy to comply with your request, but how do you know you are receiving a fair deal? If you plan to trade in your SUV, here are some tips to keep in mind before visiting the dealer.
Do Your Research
First, you want to find the market value for your current vehicle. You can accomplish this by seeing how much comparable models are selling for in your area, as this gives you an idea of what dealers are charging for the same vehicle. To do this, you can use websites such as NADA Guides. With this, you search by make, year, model, and trim. From there, you enter in the mileage of your current vehicle and choose the optional equipment it possesses such as power seats, a luggage rack, navigation system, leather seating and more. After completing these areas, it will provide you with several values. The first is the rough trade in amount. The rough designation signifies your SUV has been through the ringer and requires some care such as repairing mechanical or body defects.
Meanwhile, the NADA guide also provides an estimate for SUVs in average condition. This is where normal wear and tear might have led to exterior body damages such as chipped paint or the wheels have some damage. Moreover, the dealership might have to do some repair work to improve the vehicle’s performance so it passes state inspection laws.
Next, there’s a clean trade in. This designation is for SUVs that don’t need repairs or possess body damage. There might be minimal soiling of the carpets in the interior due to normal wear and tear, but overall, the dealership won’t have to do much work to make the SUV presentable to prospective buyers.
Lastly, there’s a clean retail amount. If your SUV is in showroom condition with minimal damage or repair issues needed, then you might be able to receive more money during trade in. Another bonus is if your SUV is newer and doesn’t have many miles on it.
It’s important to be honest with your assessment of your vehicle. If you need help, find a trusted mechanic to examine your SUV and have them give their feedback. Once you do this research, it gives you an idea of what your SUV’s trade in value could be.
Enhance Your SUV’s Condition
As you are doing an assessment of the SUV, if you notice the interior is dirty–if you have kids this can happen easily– then consider having it professionally detailed before taking it into the dealership. You can use the same thought process to apply mechanical changes too. If the SUV needs new tires, on the surface it might not make sense to pay for them since you won’t drive the vehicle anymore. With that said, if the old tires become a sticking point for the dealership, they might quote you with an average condition value whereas with new tires you could receive a clean trade in value. Since the difference between the two can result in up to several thousand dollars, that small investment could pay off.
However, it’s important to be realistic too. Perhaps your SUV doesn’t need only tires, it needs new brakes, the body has dents and other issues. In this instance, it isn’t going to make sense to do all these repairs since the dealership will likely grade your vehicle at a lower condition. So it becomes a balancing act on your part. A good rule of thumb is if the vehicle is in great shape then fix cosmetic things to give it more value. However, if there are a litany of issues with it, it’s best to take the lower trade-in value.
Don’t Forget Financing
One of the most overlooked components when trading in your SUV is your vehicle loan. If the loan’s balance is more than the trade in value for your SUV, you owe that remaining amount. What many dealerships will do is roll that negative equity over to the next loan. Financially, this is not a smart move because you are then financing the cost of your new SUV and the amount you failed to pay off from your last model. This creates an upside down loan where the amount you owe for the SUV is more than it is worth. It becomes even more problematic if you want to trade in your next SUV in the future or you are in an accident and the SUV becomes totaled. In the latter case, the insurance company reimburses you for the market value of your SUV, and if you have an upside loan, it means even with the insurance payout, you’ll be making payments on an SUV that’s sitting in a car graveyard.
These what if scenarios illustrate why it’s important to think ahead when deciding to trade in your current SUV. If you have the cash on hand to pay the difference between the loan amount and the trade in value, by all means, go for it, provided you can also make a downpayment of at least 20 percent of the price of your next SUV. However, many of us don’t have thousands of dollars set aside. Therefore, if this applies to you, consider forgoing trading in your current vehicle until you can make extra payments to lower the loan’s balance.
Don’t Take the Dealership’s First Offer
Make the dealership work for you. When they appraise your car and come back with a total, thank them for their time then tell them you’ll think about it. Unless you are trading in a rust bucket, they will cringe when hearing this because it becomes a missed opportunity on their end. Instead, receive quotes from several dealerships. This gives you different options to compare. Next, wait a few days. As you wait, dealerships become afraid they’ll lose your business, so they might offer better incentives or more money for your SUV. Therefore, be patient, walk away, and sleep on it for a few nights. Compare quotes, do more research, and wait for the counter offers to come.