In other words, the value of your car can be subjective. One person’s treasure can be another one’s trash and vice versa. We’re going to help you determine a non-biased valuation of your vehicle and explain the difference between a trade-in value versus your car’s value on the open market. Once you know the difference between trade-in and market value, it will help guide your decision on how to best cash in on your car’s worth.
Keys to finding your car’s worth
It’s useful to have an industry reference point when exploring your car’s value. A solid snapshot of the used car market is provided by Canadian Black Book, a site that offers data combed from new and used car sales at dealerships across the country.
To get the most accurate information on your car’s worth, you’ll need to take note of some info about your vehicle. Most importantly, you’ll need the make, model, year and mileage on the odometer. But you should also take down details like: manual or automatic transmission, does it have functioning air condition, and what is the “trim,” a term that simply means the version of your car’s model that comes equipped with a certain package of features.
Here are some other physical factors that will determine your car’s market value:
- Interior condition – the quality of leather seating or other types of fabric
- Exterior paint condition – any chipping or damage
- Mechanical issues with the engine
- Quality of stereo and Bluetooth features
- Primary driving environment – highways or city roads
The difference between trade-in value and actual resale value
It’s crucial that you understand the gap between a car’s value when trading in at a dealership versus selling on the open market. Simply put, the two values are rarely ever the same. A dealership will offer substantially less than what you might command in the open market. That makes your decision easy then, right? Just sell privately and get the most money possible. Not so fast!
Trading in at a dealership has a lot of advantages that you should consider. Trade-ins will save you time and the painstaking labour of selling your car on the open market, with no assurance you will sell in the time you want. It could take weeks, even months. A dealership will also put your trade-in value directly onto the purchase of a new or used car. This will bring down the total sale price and you will pay less tax on the new purchase.
That being said, you will certainly get less than whatever actual resale value you think you are entitled to. The average price estimate you get from Canadian Black Book, for example, will not be offered as a trade-in. Dealerships are also more scrupulous in their value assessment. They may see problems upon inspection that you never knew even existed with your car, and you can be sure that issue will be a reason for them to further pull down your car’s trade-in value.
In a private sale, buyers are more willing to overlook your car’s imperfections. Remember, they are a motivated buyer and need a car; unlike a dealership, who has plenty of inventory and will make it seem like they are doing you a favour by taking your car off your hands.
You should sell your used vehicle when:
- You’ve brought your vehicle to the dealership and the trade-in value being offered is unpalatably low. Don’t be afraid to walk away if you feel the price being offered isn’t fair, and just not worth the trade-in’s convenience.
- You don’t mind becoming a car dealer yourself. You’ll need to advertise your car on sites like Craigslist, Kajiji and Auto Trader, spruce up your car’s condition, and fix any lingering mechanical issues. This will not only mean out of pocket expense; be ready to negotiate, as prospective buyers will want to make you offers below your asking price.
- You don't plan on upgrading to a new car. Trade-ins bring down the price of new cars, but if you’ve decided to get around by bicycle or transit, and you don’t see a car in your future, then get the most out of your asset before it ages and depreciates any further.
You should trade-in your used vehicle when:
- Your old car just isn’t cutting it and you’ve got your eye on something shiny and new. Trading-in at a dealership makes the process a lot easier, as it reduces your overall new car price and gets your old car out of your life immediately. You can also swap over your insurance and registration at the dealership, saving you more time.
- You want to avoid the hassle of organizing a private sale. It can be onerous having to advertise, field calls, meet with potential buyers, offer test drives and inevitably be forced into negotiations with people wanting to get a deal from you. Some find the whole experience exhausting. Others enjoy it.
- You don’t want to invest more money in your current car. Your vehicle might need some TLC in order to get book value. A trade-in will be the path of least resistance.
- You want to take advantage of the trade-in tax savings. Remember: a trade-in brings down the total overall price of the new vehicle. That means GST and PST (with the exception of Alberta) will be lower.
Taking the trade-in route? Let Canada Drives be your co-pilot
If you’ve decided to go for that new car or upgrade to a better-used car, our sister company Canada Drives can help you with the trade-in process. We’ll help you find the car you want, at a price that works with your budget, and we’ll even help you negotiate the price!