If you’re looking to replace your vehicle with a new or quality used vehicle, an essential step in the process is getting rid of your current vehicle. Sure, you can put your car on the open market and deal with the stresses of selling it yourself, or you can streamline the car buying process by trading it in.
Before deciding to trade in your vehicle, you’ll want to know its trade-in value so you can make sure you’ll get a fair offer on it.
To help you determine if trading in your vehicle is right for you, we’ll help clarify your trade-in value, how trading a vehicle works, what you can expect during the trade-in process, and more.
Tax Benefits of Trading a Vehicle
Trading in a vehicle is an easy way to get cash for your old car without the stress of no-show buyers and tire kickers. The downside is the trade-in value is generally lower than the private party value because the dealership still has to make a profit. However, the tax savings you get for trading a vehicle could help narrow or close the gap between the trade-in value and the private party value.
In Canada, you must pay provincial and federal taxes on a vehicle. Combined, these are called the harmonized sales tax (HST), and you only pay HST on the price of the vehicle minus your trade-in. If you sell your old car privately and buy a new or used car, you’ll pay the full HST.
Sometimes the car you want to test-drive is on a storage lot, parked among a lot of other cars. It has to be brought over, washed and prepped before you can try it out. This is why you’ll want to make a test-drive appointment.
You can easily cut down on your wait time at a dealership: Shop during the week and have all necessary paperwork with you. That includes bringing your insurance information, your driver license and the title for the car you’re trading in.
Many variables go into a trade-in valuation, ranging from what condition the car’s in to what tires are included in the trade-in package and what the current market value is for the car. Here are the variables dealerships consider when evaluating your trade-in and how each variable impacts your car’s value.
Car dealers will also consider your car’s condition when trading it in. The dealer will start by pulling a vehicle history report on your car and checking for any accidents or other potential red flags.
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Included Accessories
Included accessories can impact your trade-in value because they can make the vehicle more marketable for the dealership.
Things like a roof rack and cargo box on your large SUV, or all-weather floor mats in your sedan are all items you want to let the dealership know you’re including in the trade.
In Canada, winter tires are required in some provinces and recommended in most others. This makes them an important part of a vehicle valuation.
If you’re offering your trade-in with a set of summer and winter tires, let the dealer know, as it’ll make the vehicle more marketable and potentially increase your offer. If those winter tires are already mounted on wheels and ready for installation, that’s even better.
If the dealership doesn’t consider any included accessories in its trade-in valuation, you can remove these items and use them on your new car if they fit, or you can sell them for extra cash.
