• Buying Guides

Trading In a Car with Problems - What to Expect

By Michael O'Connor | December 9, 2021

When the time comes to buy a new car, one of the first things people usually think about is what to do with their old one. Odds are, if you are buying a new car it is because the one you currently have has some issues or it is no longer financially viable to fix it. When this happens, it can be a better value to simply buy a new one. This can make selling your old car a major hassle, especially if you want to at least get some value for it. That’s why trading it in can be such a viable option.

If you are thinking of trading in your older car at the car lot where you are buying your new one, you can get a wide variety of benefits that you won’t get trying to sell in on the used market. Knowing everything you can about what to expect when trading in a problem car can help you get the best deal.

Trading in a Car With Issues

If your car has significant repairs that are not worth fixing, a trade-in may be your best bet. Dealerships will give you an offer on your trade-in and you can decide whether or not this will be your best course of action. You should always go to the dealership and see what you would be able to get for your old car as a trade-in. This will help you decide on whether or not it would be worth it to try and sell it to a third party or if you just want the convenience of the dealership taking it off your hands.

Will a Dealership Take a Car That Has Issues?

Most of the time, a dealership will take your car as a trade-in, even if it has significant issues. One of the main reasons why doing a trade-in is a good idea for most vehicles with mechanical problems is that the dealership will value it based on its individual parts as opposed to the car as a whole. Dealerships part out junk cars and work with vendors to get the maximum car value whether or not it is operating at its top performance. Because of this, you will usually end up getting a much more competitive offer for it than you would try to sell it to a third party.

Should I Fix My Car Before Trading It In?

Whether you should fix a car before trading it in depends on the issues that it has. If your vehicle has serious engine or powertrain problems, such as a bad transmission, blown engine, or electrical problems, you may end up paying much more for the repair work than you would end up getting back for the trade-in. However, if it has a few minor issues, these could be worth fixing before you trade it in. The best way to find out is to take it to the car dealership and find out what they would give you for the trade-in and then go to the mechanic and get a quote on repairs so you can compare the two. You can also take a new car for a test drive and get a price on it while you are at the dealership for a one-stop buying experience.

Getting a Car Ready for Trade-In

While it may or may not be worth it to get a car’s problems fixed before you trade it in, there are a few things you can do to make sure you get the maximum value for it. These repairs are inexpensive to make and can improve your chances of getting a better price by upping the curb appeal of the car. Even if there are larger engine problems, electrical issues, or major repairs that need to be done under the hood, these superficial fixes can help you at the dealership.

Change the Headlight Bulbs

The bulbs in your vehicle’s headlights are inexpensive and easy to replace. If the car has any dead headlights or taillights, you can put new bulbs in and take that one small point against it off the list. While you are replacing the bulbs, you can also clean the insides of the light assemblies and make sure they don’t look faded or dim when they are turned on.

Clean the Interior

Thoroughly clean and vacuum the vehicle’s interior to make it look as new as possible. Most floor mats can be washed in a standard washing machine and left out to dry. You can also use upholstery cleaning products usually reserved for furniture to clean the seats and the dashboard. This will allow the car to make a much better first impression when it is getting its inspection and valuation at the dealership.

Touch Up Any Scratches

If the exterior has any small scratches, you can touch them up with touch-up kits. These kits are generally available from the manufacturer but can also be purchased from a third-party dealer if you know the type of car you have and what the color is called. Filling in small scratches can make a big difference in the overall appearance of the vehicle.

Wash the Exterior

If possible, take your car to a professional car wash and get it a premium wash. The idea is to raise the curb appeal as much as possible and make it look as new as you can. Get a complete wax for it as well to protect the finish, especially if you have recently done touch-ups.

Top Off the Fluids

Top off all the fluids in the car like the oil, transmission fluid, and coolant. The dealership will check these fluids and if they are low, they will take this as an indicator that the vehicle has not been treated well in the way of upkeep. If you can, get an oil change as well as any other fluid changes before you take the car in to be inspected so they will be brand new.

Advantages of Trading in a Car

While it might seem like selling your car on the used market might be the best way to get it off your hands, there are numerous advantages to trading it in to the dealership where you are buying your new car. Having everything done at the same place can ease a lot of the stress involved in getting rid of a used car and can roll all the transactions into one. The advantages of a trade-in far outweigh some of the disadvantages, especially if your car has issues.

Simplicity

The biggest advantage of trading in your car is the fact that the process is much simpler. When you sell a car to a third-party car buyer, there is a lot of extra work you have to do to make sure you get the best possible deal. Listing the vehicle in different places and meeting with potential buyers can eat up a lot of time and money, not to mention stress, which decreases the overall value of the vehicle. When you trade in your vehicle, everything is done in a one-stop-shop with the same people, and you can be reasonably certain that everyone involved is honest and professional.

When you sell a used car that has issues, you also run into the problem of haggling and lowballing. People looking to buy a used car will use any advantage they can to try and get it for less and the problems that it has will be a major sticking point. Trading the car in is a much more straightforward process, and while you are still likely to have to take less for it than you would if it was in perfect condition, you can be sure that you are getting a good deal despite its problems.

Pay Off Your Loan

Even if you still owe money on the current loan for your car, you can trade it in to a dealership as a part of your down payment. As a basic rule of thumb, any dealers will generally pay off the rest of your loan upfront and get the title from the lender, which makes them the ideal place to get rid of your car if it is still worth more than what you owe. This is called positive equity and the balance will be used towards your down payment. Even if the car has many issues and is no longer worth more than what you owe, which is called negative equity, trading it in is usually still possible.

Potential Tax Savings

Many people trade in their cars instead of selling them on the used market because it can save a lot of money when it comes to sales tax. When you trade in a vehicle, the car's trade-in value is subtracted from the total cost of your new vehicle. Because of this, you will end up paying less on the sales tax for your new vehicle than you otherwise would.

If, for example, you want to buy a car that costs $40,000 and your trade-in gets you $10,000, you will usually only be paying the sales tax of $30,000. In many cases, this will end up being a much better deal and net you more leftover money from your budget than it would if you sold your used car to a third party. However, sales tax laws vary from state to state and this may not always be the case. Also, if your older automobile has many issues, you may not get enough for your trade-in to save much in the way of tax.

Paperwork Done By the Dealership

Because you are leaving all of the transactions in the hands of the dealership, there is a lot less work for you to do once the sale is done. The dealership will deal with the DMV and the transfer of title as well as all the other paperwork that is required when you buy or sell a car. All you will have to do is sign it and you can be on your way.

Final Thoughts

Trading in a vehicle is one of the best ways to get it out of your possession, especially if you are going to be buying a new car. Having the dealership take care of all the paperwork and roll everything into one transaction could be well worth it, especially if the car has problems. The dealership will be able to give you the best possible value for your older vehicle and you can drive away in your new one knowing that everything is taken care of and out of your hands.