This article contains links to products or services from one or more of our advertisers or partners. We may receive a commission when you click or make a purchase using our site. Learn more about how we make money.

How to trade in your car

Follow these 6 steps to get the best deal out there.

Updated

Fact checked

Trading in your car involves bringing your current vehicle to a dealership for a new one. Instead of paying for the new car in full, the dealer subtracts the trade-in value from the price tag. Like with most aspects of car buying, there’s some wiggle room to maximize your trade-in value.

CarsFast Car Loans

  • Min. Loan Amount: $500
  • Max. Loan Amount: $75,000
  • Interest Rate: 4.90% to 29.90%
  • Loan Term: 12 months - 8 years
  • Choose from thousands of vehicles
  • Multiple financing options
  • Pre-approval in 60 seconds
  • Vehicle delivery to your door

CarsFast Car Loans

Browse thousands of vehicles from dealers across Canada and get matched with financing that meets your needs. Apply online to purchase a new or used vehicle and get the vehicle delivered to your door.

  • Min. Loan Amount: $500
  • Max. Loan Amount: $75,000
  • Interest Rate: 4.90% to 29.90%
  • Loan Term: 12 months - 8 years
Promoted

How to trade in your car in 6 steps

Technically, all you need to do to trade in your car is bring it to a dealership, pick a new car and sign the paperwork. But you probably won’t get the best trade-in value. These steps can help ensure you don’t go into a trade-in blind and get a raw deal.

Step 1: Get an estimate of your car’s value

Start by getting an estimate of your car’s trade-in value online so you have a number in your head. Websites like Canadian Black Book and Auto Trader Canada can help you get a solid picture of how much you should be able to get for your used car.

Be prepared to have the following information on hand to get an accurate estimate, including:

  • Kilometres
  • Model, model, trim
  • Condition level
  • Your postal code

If your car’s been damaged in any way, you might want to take it to a mechanic to get it appraised, since its value might have been affected.

Step 2: Calculate your equity

Already own your car outright? You can skip this step. If you’re still paying off your loan, find out if you have positive or negative equity by subtracting your loan balance from the trade-in value.

If you get a positive number, that means you have positive equity and might be able to get a better deal when you trade it in.

Step 3: Gather your documents

Dealerships typically ask to see several documents when giving you a quote, including:

  • Car title
  • Car registration
  • Loan payoff amount
  • Loan account number
  • Driver’s license

You also might need to bring all of the keys you have for the vehicle you want to trade in.

Step 4: Get quotes from a few dealerships

Do some research on dealerships in your area and schedule an appointment. Some dealerships might be able to give you a quote over the phone or by email, while others might insist you bring in the car.

When you bring in your car, a used car manager will examine the vehicle before coming up with a quote. Even if a deal sounds good, don’t sign any paperwork until you’ve heard from other dealerships. Consider starting with a dealership that allows you to hold on to your offer while you shop around.

Step 5: Negotiate with your chosen dealership

Use the different quotes you received to negotiate a better deal at your chosen dealership. But don’t ignore the cost of your new car.

Research the value of each car you’re considering buying with your trade-in and use that to negotiate down the cost. Check out these tips for buying a new car which can help you make a smarter decision. If you think a dealership isn’t giving you a fair price on a used car, consider having the vehicle appraised by an independent third party.

Step 6: Close on your trade-in

How this step works can differ depending on whether you own the car or still owe money on it. If you own the car, trading it in is relatively straightforward. The dealer subtracts your current car’s value from the new car and you pay the difference. Or if you’re buying a car that costs less than the trade-in price, the dealer writes you a check.

What happens when you have a car loan depends on whether you have positive or negative equity. If your car’s trade-in value is worth more than your car loan balance, the dealer deducts the difference from the price of the new car.

If you have negative equity, you’re responsible for covering the difference between your loan balance and the trade-in price. You might be able to roll the negative equity into a new car loan, but that adds to the risk of going underwater on your next car loan. Pay it off in cash if possible to avoid another upside-down car loan.

Compare car loan lenders

Name Product Min. Loan Amount Interest Rate Loan Term Min. Credit Score Requirements
Car Loans Canada
$7,500
3.99% to 29.95%
12-84 months
300
3+ months employed, min. income of $2,000/month
Search thousands of vehicles online, including $0 down options, from dealers across the country and get matched with affordable financing options. Auto loans are also available to those with bad credit, consumer proposals and bankruptcies to help rebuild credit.
CarsFast Car Loans
$500
4.90% to 29.90%
12 months - 8 years
300
Gross income of $1,800/month, 3+ months employed
Browse thousands of vehicles from dealers across Canada and get matched with financing that meets your needs. Apply online to purchase a new or used vehicle and get the vehicle delivered to your door.
Loans Canada Car Loans
$500
0% to 29.99%
3-96 months
300
Employed for at least 3 months, min. income of $1,800/month
Get access to financing from multiple lenders across Canada through a single application with Loans Canada. Bad credit, CERB and EI borrowers are considered.
Carloans411 Car Loans
$500
1.90% to 19.99%
Up to 72 months
300
Employed for 3+ months, min. income of $1,600/month
Get connected with suitable lenders through CarLoans411. Finance your next car, van or truck with loans available in amounts from $500 to $50,000. Check eligibility for this loan through LoanConnect.
LoanConnect Car Loans
$500
10.00% to 46.96%
6-60 months
550
No min. income requirement
Get access to 25+ lenders through LoanConnect's brokerage. Receive pre-approval in as fast as 60 seconds and get your funds in as little as 24 hours.
Auto Arriba Car Loans
$3,500
8.99% to 29.50%
6-84 months
N/A
Currently employed for 3+ months
Auto Arriba offers car loans starting at $3,500 up to $100,000, with as little as a 30 minute loan turnaround time. On a limited number of approved loans, Auto Arriba is currently offering a rebate of the amount of your first scheduled payment 30 days after it has been processed up to a maximum of $500.
Fairstone Secured Personal Loan
$5,000
19.99% to 23.99%
3-10 years
560
Have an established credit history and own your home
Fairstone offers secured personal loans up to $35,000.
loading

Compare up to 4 providers

Three tips for negotiating a good trade-in deal

Ready to trade in your car for a new one? Follow these pointers to get the best deal out there:

  • Brush up on your sales tactics. Go into the dealership with an idea of what to expect so you don’t walk away convinced your car is worth less than it actually is.
  • Negotiate the new car price first. Focusing on the price of the new car you want to buy can help you hone in on the difficult part before tackling the trade-in deal.
  • Time it right. Dealers are often more flexible at the end of the month or year, when they’re trying to move cars off the lot.

Should I trade in my car?

Trading in your car takes a lot less time than selling it yourself. You won’t have to take it in for inspections, advertise it or make time to have prospective buyers test-drive it.

You also might be able to avoid paying sales tax on your new car, depending on where you live. Or you might only have to pay sales tax on the difference between your new car’s value and your old one’s.

Should I sell it to a private buyer instead?

If you want to get the most money for your vehicle, selling it to a private buyer might be a better choice. Dealers tend to buy trade-in cars at wholesale value, which is less than the sticker price you’d get from a private-party purchase. If you’re not a skilled negotiator, your dealership could even pay you less than that wholesale price.

Bottom line

Taking the right steps when you trade in your car can help ensure you get a fair deal. But if you’re looking to maximize profits, consider selling it privately instead.

You can learn more about how car financing works with our guide to auto loans.

Frequently asked questions

More guides on Finder

Ask an Expert

You must be logged in to post a comment.

Go to site