Trading in Your Car for a New Car Loan

It’s possible to get a car loan with bad credit, but you’ll want to do everything you can to keep those monthly payments down. One way to save on the cost of a new car is to trade in your old vehicle. Even if it’s a clunker, you may be surprised at how much value you can get from it.

Value Your Car

The first thing you need to know is what the Kelley Blue Book value of the vehicle is. You can look this up online; remember when entering the details be brutally honest. After all, at this stage nobody is going to see it but you, and you’re only cheating yourself if you put in that your car is in excellent condition when it’s actually only fair. Knowing the real value will help you when it comes time to negotiate—you may actually be able to wheel and deal to get a bit more than it’s worth.

Trade vs. Sell

You might be tempted to sell your car outright. This can be a mistake. You may or may not get more from a sale than from a trade, but a sale is a lot of hassle that involves title transfers and an additional level of haggling which you avoid by working through the dealership. The truth is that often, a car dealer is in a position to offer you more in trade value than you might get from a sale, due to the amount of wiggle room they have on the price of the car you’re buying. This is how dealerships are able to have those, “push it, pull it, drag it” sales where they pay at least $2,000 for everything.

Wheel and Deal

When it comes time to negotiate your car financing, have a printout of your car’s value from that very day. That way, if your dealer shows you a lower value, you can counter it with your higher one. Dealers have room to negotiate; don’t be afraid to push for what you want to get, so long as it’s not ridiculously out of the ball park.

Be Willing to Walk

When the dealer makes you an offer, if he doesn’t seem willing to budge, be willing to walk out the door. Tell him you have a few other dealers with whom you need to talk, and ask how long the offer will stand. If he says now or never, then leave—this is a hard sell tactic and you won’t get a good deal. If he gives you a standing offer, ask for a business card and ask him to write the offer on the card and initial. That way you can always come back later.

Using your car as trade-in can give you great leverage to save money on car financing, and if you’ve got bad credit, any leverage is good leverage.