How Does a Dealer Value Your Trade-In?

“I want a good number for my trade-in.” I hear you, and I want the most for my own vehicles too. So how does a dealer put a number on a trade-in? A lot goes into it: market conditions, the vehicle’s condition, its CARFAX and history, mileage and more. Dealers also use software to see closely where the market is. It’s a lot more than a guess.

Our goal is to get you the best price we can while staying competitive with the market at the time of your trade-in.

What affects your offer

Condition. Think about the overall condition of the vehicle. Has it been in an accident? Is there body damage? Is the paint peeling? Are the wheels scuffed?

A lot of people think new tires, wiper blades or brake pads add value. They don’t, because they’re regular maintenance, and reasonable maintenance is expected on any vehicle. The opposite does cost you, though. Bald tires, worn brake pads, worn-out wipers or any normal wear item that hasn’t been kept up can take value away.

Dealers also look for warning lights: check engine, tire pressure (TPMS) and oil. The problem behind a light could be a small fix or a major one, and that has to be factored in. That’s where an OBD-II scanner comes in. It plugs directly into the vehicle and reads its trouble codes, which point to a specific sensor, system or component that’s working outside its normal range. It takes the guessing out and shows what may actually be wrong.

Mileage. Mileage is a key factor, measured against the vehicle’s age. Higher miles for its age can lower the appraised value, and lower miles for its age can raise it.

Reconditioning. This is what a dealership spends to get a vehicle ready for the lot, starting with a used vehicle inspection. What the inspection finds determines how much goes into it. The average franchise dealer (think Ford, Honda or Toyota) puts $1,000 to $1,900 into a vehicle before it’s ready to sell.

The market. The overall market affects the appraised value, and every market is different. The same vehicle can appraise at one number in one region and a different number in another. Dealers use software that pulls sales data from across the country into one place, so a valuation is based on real data instead of guesswork. Dealers can look at the market anywhere from 50 to 500 miles out. Kelley Blue Book, Black Book, J.D. Power (which many lenders use) and Manheim’s MMR are a few of the tools dealers commonly use.

Market day supply. Day supply shows how quickly vehicles like yours are selling in the market. Under 30 days of supply means it’s in demand, which usually means a stronger offer. 45 days or more means it’s moving slowly, which usually means a lower offer. A dealer has to be able to resell your trade-in.

Trading in can save you on tax

Here’s one reason trading in can come out ahead of selling your vehicle yourself. In Georgia, the vehicle tax (TAVT, currently 7%) is charged on the price after your trade-in value is subtracted, not on the full price.

Example: a $30,000 trade-in offer x 7% = $2,100 less in tax. Counting that savings, your trade-in is worth $32,100 to you.

That assumes the vehicle you’re buying costs at least as much as your trade.

Registering in South Carolina? You’ll pay South Carolina’s fee when you register at home instead, and it works differently, so your savings will usually be smaller. See Trading In a South Carolina Vehicle at a Georgia Dealer.

Every appraisal is different

I hope this takes some of the mystery out of how a dealership appraises a vehicle. Every trade is unique, and a vehicle that’s great today may change tomorrow. I’ve been there with my own vehicles. In the end, we want to give you a fair appraisal and get you into your new ride.

Curious what yours is worth? Get your trade number, with no commitment to buy.

Thanks for taking the time to read and check us out. Talk to us!