Trading in Less effort and money

Many buyers prefer to trade in their current vehicle because it's easy. All you have to do is drive to a

dealership, sign a few papers, and drive away in a different vehicle. You can apply the trade-in amount to

your down payment, reducing the amount you need to finance.

There can be tax advantages, too. Most states require that sales tax be paid only on the

difference between the price of your trade-in and the vehicle you are buying, not the full

price of the car you bought. However, this tax benefit does not apply if you sell your old vehicle yourself.

Check with the Department of Motor Vehicles in your state for details.

The downside of trading your vehicle in is that you might leave behind hundreds, if not thousands,

of dollars for the dealer. As mentioned before, the best you can hope for when trading in is to get the

car's wholesale value, which is significantly less than what you would expect to get if you sold it yourself.

In addition, even if you've checked all the pricing sources and think you know what

your vehicle is worth, you'll likely have to haggle with the salesperson to get the

best deal.

Another problem you may encounter: If a dealer already has six used silver Camrys on the lot,

for instance, he isn't likely to pay top dollar for yours. And if your trade-in isn't one the dealer wants

on his lot, it will probably be sent to auction and will be discounted accordingly.

Just remember, no matter how tired you may be of your current vehicle, a dealership isn't doing you

a favor by taking it off your hands. If the dealership buys your car, it's because there's an inviting

profit at the end of the transaction.

HOW TO GET THE MOST MONEY WHEN TRADING IN YOUR CAR:

There are several things you can do to maximize the value of your trade-in:

• The appearance of your vehicle is an important consideration when the used-car manager estimates its value.
  
  
• If your car needs repairs, it could help to get an estimate to take with you. This could provide a little bargaining power when the dealer's estimator starts deducting repair costs from the figure offered to you.
  
  
• Try to sell your car to a used-car dealer. They're always looking for clean, low-mileage vehicles for their lot. And if yours is a popular model, you just might be able to get more than the wholesale price for it.