Car trade ins are an alternative to selling

• When someone decides to buy a new car, one of the first things that comes up is what will become of their current vehicle if they own one. One option, is to sell the old car and buy the new one as two separate transactions. The other is a car trade in. When buying a car from a dealership, salesmen will usually allow the buyer to trade in their old vehicle for a credit against the cost of the new one. By trading in, the cost of a new car can be significantly reduced and the transaction of buying and getting rid of the old car are completed simultaneously.
  
  

The trade in process is a negotiation in and of itself

• Although the trade in process is instigated when a buyer is looking at purchasing a new car, the actual negotiation of the trade in should be separated from the negation of the new car price; the value of a trade in has no bearing on the value of a new car. When negotiating the price of a trade in vehicle, the customer should research the value of the vehicle ahead of time, by using a resource like Kelly Blue Book car value listings. Dealerships know that customers are often unsure of th worth of their vehicle. As a result, dealerships will usually offer somewhat less than what they would truly be willing to pay for the car.
  
  

Positives and negatives of trading in

• Vehicle trade ins have several benefits and drawbacks with respect to selling an old car outright. Some negatives to trading in are that it exposes the customer to more negotiation with the dealership, which makes many customers uncomfortable. Secondly, the dealer knows exactly how much they are willing to buy and sell any given car for, but the consumer has limited information, so getting a good deal can be difficult unless one has good negotiation skills. Third, the amount a dealer offers for a trade in will often be less than the amount that car could sell for to a private party. On the plus side, getting both the selling and buying done in one fell swoop is convenient. Also, trading in allows the customer to force a sale of their vehicle, when they might have difficulty attracting a private buyer. Another important consideration is that by trading in and reducing the overall cost of a new car, the amount of sales tax that must be paid on the new car is accordingly reduced. This means that even if someone trading in a used car could have sold it for more to a private party, they might end up saving money: if the trade in reduces the sales tax owed on the new car by an amount larger than the difference between the trade in and private sale values, the customer comes out ahead.