Generally, you should only trade in your car if the dealer can pay you more than the amount left on your loan. Since they also have sales goals to meet at the end of the month and the quarter, March is a great time to get a strong trade-in offer. You have positive equity when your vehicle is worth more than what you owe. If you have negative equity, you'll still owe money on the loan after you trade in the car. If you don't have a loan on the car, the best time to trade it in is often before its factory warranties expire, typically at 36,000 miles or three years for new vehicle warranties and 60,000 or five years for powertrain warranties.
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How long should you keep a financed car before trading it in?
You can trade in a financed car at any point, but you might consider waiting at least until you've paid down the loan enough to have positive equity when you trade it in. Credit.org has a helpful chart that plots the number of years you've owned the car and the original price against maintenance costs, which increase the older the vehicle gets. This chart can help you decide the most advantageous time for you to trade in your car.
Is it better to trade a car in before or after paying it off?
It's generally OK to trade in a car with a loan if the dealer will give you more for it than what you owe. But if you'll get less for the trade-in than what you still owe on it, it may make more sense to wait until one of the following:
- You pay off all of your loan
- You pay off enough of your loan to have positive equity on the trade-in
- Market conditions change so your trade-in is worth more than what you owe on it
Should I trade in my car after two years?
Trading in your car after two years and before three years might get you more than if you waited until after three years, because your new car warranties are likely still active at two years. But it should ultimately depend on your financial situation and your car's depreciation after the two years. Get some trade-in estimates to see if you're comfortable with the amount you'd get. You can get estimates and offers online through the Progressive Car Trade-in Service, or you can visit dealers in person to negotiate a deal.
If you have a car loan, check if trading in the car after two years would result in positive or negative equity. If the equity is negative (i.e., you'd still owe money on it after you traded it in), considering waiting to trade it in when the equity would be positive.
What's the best mileage to trade in a car?
The best mileage range to trade in a car is often between 30-40,000 miles or between two and three years old, before your new car warranties expire. You're more likely to receive a higher trade-in appraisal when it has fewer miles on it and more of its warranty left . Learn more about what dealers and buyers consider to be good mileage for a used car.
Consider these milestones when determining the best time to trade in your car from a mileage standpoint:
Before factory warranties expire
Most cars have new vehicle warranties for three years or 36,000 miles and powertrain warranties for five years or 60,000 miles, whichever comes first. Trading in your car before its warranties expire generally nets a higher trade-in value.
Before major service intervals
There's little financial sense in waiting to pay hundreds of dollars for major routine maintenance, like new tires or brakes, only to trade in the car. If your car is in good shape and you've been consistent with its regular maintenance, trading it in before your next milestone may serve you better.
Before 100,000 miles
This is primarily a psychological milestone since no functional difference exists between a car with 99,000 miles and one with 100,000 miles. But dealers need to profit from reselling your car after you trade it in, and a car with more than 100,000 miles may not sell for as much as one with less than 100,000 miles, either to a new buyer or at auction.
Remember, mileage guidelines are often more about other factors like warranties and maintenance needs. Plus, city driving is tougher on cars than highway driving, so any mileage recommendation is just an estimate. Also, thorough, and consistent maintenance is better for a car — having maintenance records can help with your trade-in valuation.
Learn more about how to trade in a car.
What is the best time of year to trade in your car?
The first two quarters of the year is the best time to trade in a car, according to Edmunds.com, thanks to higher values and more buyers in the market at the beginning of the year than later in the year.
Dealerships typically need more used car inventory in the first half of the year, so they're eager to make deals. But when the new model comes out, your used car will be seen as another year older, which lowers its resale value. So, trading it in well before a new model year debuts can increase the trade-in value.
The best time of year to trade in a car can also depend on the type of car. For example, if you have a sportier car or a convertible, you may get more value from trading it in during the spring months. Demand for those cars will steadily increase toward summer. Similarly, trading in a 4x4 or SUV with all-wheel drive in the fall can be advantageous in places with more snow and ice.
Thinking about moving forward with your trade in now? Your next step is to start gathering the car trade-in paperwork.
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