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Trading In a Car with Problems - What to Expect

By Autolist Staff | November 13, 2019

Trading in your vehicle to a dealership is a good way to help fund the purchase of a new car. But what if a car has mechanical problems, such as a blown engine or gasket leak? If you make the right preparations, you can still trade in the vehicle.

Why Should You Trade in Your Car?

Most car dealers allow trade-ins. That is, they purchase your current vehicle to help cover the cost of a new one you want to buy. Trade-ins are especially helpful for people who need a new vehicle but can't afford to advertise their old one or meet with prospective car buyers. The trade-in value of a car is typically its market value, such as you might find through Edmunds or Kelley Blue Book. The amount will also depend on the type and year of the car, as well as popularity and condition. Trade-ins are a great way to get an old car off your hands, and they sometimes cover the entire down payment of a new car purchase. Trade-ins can also lower the amount you must pay each month if you take out a car loan.

Trading in a Car With Problems: How It Works

When you arrange to trade in a car, the dealer usually inspects it for damage and deducts the cost of any necessary repairs from the value of your vehicle. Be upfront about your car's problems when trading it in because dealers sometimes make less generous offers if they discover problems on their own. If your vehicle has significant collision damage, such as a destroyed fender or missing bumper, a dealer is unlikely to accept the vehicle in trade. However, most mechanical problems are negotiable, such as rusted exhaust systems, worn suspension components and wheel bearings and oil leaks. If your car has electrical issues, such as faulty door locks or a battery that dies at random, the dealer may not accept the vehicle depending on the severity of the problem. Also, minor body damage such as a fender bender is rarely a deal-breaker. Dealers like to recondition cars they get through trade-ins, even when the vehicles are well-maintained.

It's best to get a vehicle with problems appraised before stepping onto the dealership's lot. Edmunds, Kelley Blue Book and the National Automobile Dealers Association feature online appraisal tools to make evaluating your car easier. The tools let you include the car's condition for a more accurate figure. However, dealers typically have their own estimates of the cost of repairs, and these may differ from yours. Dealers are also required by law to fix critical problems with cars they plan to resell, so expect your car dealership to deduct the cost of these repairs from the car's trade-in value. These include any issues that would prevent the vehicle from passing a smog test or state inspection.

In some cases, the dealer buying the vehicle may already be planning to sell it to a wholesaler. They buy cars from dealers to sell them to other dealers or at car auctions, and they don't always care if the cars they buy have problems. Even if your vehicle has significant damage, you might be able to trade it in anyway.

Preparing Your Car for a Trade-In

How much work you should put into your car before trading it depends on how bad the vehicle's problems are. If the vehicle has a big problem, such as a blown engine or bad transmission, it most likely needs repairs that are more expensive than what the vehicle is worth as a trade-in. Small problems, on the other hand, are worth fixing. If your car is dirty, you should hand-wash and wax it before bringing it to the dealer. Use carwash product instead of household cleaners, and scrub the vehicle with a carwash sponge instead of a cloth or washing mitt to ensure the car is properly cleaned. When waxing, both carnauba-based and synthetic polymer-based waxes can give the vehicle an attractive shine, but the polymer-based stuff is easier to apply. Also, you should remove any junk inside your car. For an extra touch, consider taking the car to a detailer to shampoo the carpets, remove bad odors, and give the glass a deep clean. Remember to keep your car's maintenance records in the glove box and remove all other papers.

Also, you should top up all your vehicle's fluids, such as the oil, brake and transmission fluids. Dealers usually top up these fluids when they buy a car, but low fluid levels may make dealers suspect problems with the vehicle. If the Check Engine light is on, the vehicle will need to be inspected by a mechanic to determine the cause of that warning. Remember to replace any burned-out bulbs, including those for any interior lights.

If the headlights and taillights are foggy, the lenses may need buffing. Rub whitening toothpaste on the lenses with a cloth, then rinse off the toothpaste with water. It's also a good idea to replace your windshield wipers if they're old or cracked. Windshield wipers are cheap, and auto stores typically help customers install them if they can't do so themselves. Also, if any of the exterior glass is cracked, your insurance may give you a new one for free. You might also want to remove any scratches on your vehicle with touch-up paint, which only costs a few dollars at most auto shops. Wet-sanding the car can also enhance the paintwork. Don't get too carried away with detailing, though, as dealerships can detail vehicles much more cheaply than car buyers can. Also, removing too much dirt from your car can reveal subpar paintwork that's better left hidden.

Other Considerations

When trading in a car with problems, there are other factors to consider. For example, it's helpful to have multiple dealers appraise your vehicle before trading it in. That way, you have a better sense of the vehicle's worth. You also have negotiating leverage if one appraiser thinks your car's value is higher than another. Remember to visit dealers that sell your car new. These dealers are less likely to lowball you, as they know your car's actual value.

Not all dealers offer free appraisals, but some do, such CarMax, which gives car buyers a free written estimate and seven days to accept it. When trading in your car, you might want to provide a vehicle history report to the dealer, as this builds trust. If the vehicle has had prior owners, a vehicle history report can also reveal problems with the car you may not have known before.

Even if your car has problems, trading the vehicle in has many advantages over selling it to a private buyer. Depending on the value of your trade, a trade-in may eliminate the down payment on a new car. Also, you don't need to make a Craigslist ad for a vehicle you want to trade in. Dealers are also more accepting of problems than private buyers since they can sell damaged cars to wholesalers. Finally, dealers can handle all the sales paperwork for a hassle-free transfer. Trading in a vehicle with problems is a good way to get it off your hands while helping to fund the purchase of a new vehicle.