The Best Time to Trade in a Car

The same “lifehack” approach is frequently used when customers trade in their old vehicles, just as buyers constantly look for the perfect time to buy a car. Generally, trading your vehicle will net you less money than selling it privately. The most straightforward way to obtain a better bargain on a new model is to trade your used car. Knowing when to do so can be pretty significant.

The dealership must account for refurbishing the vehicle and turning a profit. Several things also impact the trade-in price. You can better prepare for the price you’re quoted at the dealership by being aware of some of these. The best use of your current vehicle should be balanced with maintaining a high trade-in value as an owner. We’re here to outline what to look for as numerous aspects affect a used car’s worth.

When is the Best Time to Trade in a Car?

Best Time of the Year

Timing a trade-in can influence when purchasers think about the optimum time of year to buy a car. Early in the year, the first two quarters often offer better car trade-in prices. Dealers need more cars at this time of year to meet the pent-up demand because there are usually more buyers in the market. Additionally, early in the year, when a new model year is only a few weeks old, rather than later in the year, when a recent model year is a few months old, your car can feel newer.

Based on the car you drive, you must also exercise strategic thinking. For instance, before the snow starts to fall, the demand for AWD (all-wheel drives) would probably be higher. As the hot season approaches, a convertible can fetch a more excellent price. Consider when you can sell your automobile for the maximum money, then promote a few weeks beforehand. The end of the year is perhaps one of the most suitable times to trade in your current car to purchase a new one. Dealers are frantically trying to move existing inventory to make place for the upcoming new models as manufacturers wind down production of the current model year. Thanks to the abundance of year-end rebates and incentives, you’ll probably receive a terrific price on your new buy.

Best Mileage

It has long been believed that a used car has a higher value if it has fewer miles. And in some instances, that might be the case. The price of a used car does not, however, generally decrease significantly as the mileage increases. Even while a secondhand car’s value reduces considerably as the miles rack up, cars with 100,000 kilometers or more don’t suffer a significant loss in value. The condition of a used car and its maintenance history are more critical factors in the equation. An old automobile with 100,000 miles and excellent maintenance may be worth more than one with fewer kilometers and poor maintenance.

The model year is another factor that affects how much a trade-in is worth. A car often retains 60-70% of its value only a few years old. Therefore, it doesn’t matter how many miles are on a newer automobile; it will probably still get a reasonable trade-in price. The opposite is true for automobiles older than five years; regardless of how well they are maintained, those cars cannot achieve the same value retention standards.

Take Advantage of Taxes

The most convincing argument for trading rather than selling may depend on which state you reside in. Why? Because trading in your car will save you money if you live in a state that levies sales tax. You pay a specific tax rate when you purchase an automobile. You only pay sales tax on the difference between the initial additional tax from your purchase and the sales tax on your trade-in when you trade in your old automobile.

For instance, if your tax rate is 8%, the taxes associated with purchasing a $30,000 car will total around $2,400. In contrast, if you have a trade of $15,000, you typically have to pay sales tax on the difference between the two in many jurisdictions. In the given instance, around $1,200. To make up the tax difference, you would need to receive more than $16,200 if you intended to sell that $15,000 automobile on the open market. Taking everything into account, trading would probably be the wiser choice.


When you purchase a new car, a maintenance clause and warranty agreement specify how often and where maintenance must be performed. After the warranty expires, you will be responsible for paying the expenses. Changing the oil and filters is necessary and inexpensive, but you should strive to time the primary replacements.

One of the higher costs is the timing belt and related parts. Try to accumulate the appropriate mileage for a replacement during the warranty period if you intend to keep the car after its expiration date. Then, trade it in before the following cycle. The same reasoning can be used to explain brakes and suspension. You should become familiar with the parts of your car because nothing lasts forever. Look through automobile forums to find out what users with more experience have to say about the particular model. Using its aid, you can establish a distance cap and avoid expensive repairs.

The Best Loan Point to Trade in

The optimum time to trade in a car you purchased with a loan is a personal choice that will vary from person to person. However, there is an actual worst time. We don’t advise trading in your car if you still owe money on your loan and haven’t built up any equity. It indicates that you are underwater on your loan and still owing more money than the automobile is worth. This scenario is happening increasingly frequently as auto loans have been getting longer on average recently. Read our post on how to handle underwater loans for more information. If you trade the car in now for another, you’ll also be in default on that loan, which will make the situation worse.

Contact your creditor instead to learn how much you still owe on the loan. If it is more significant than what you owe, compare that to the anticipated worth of your automobile as a trade-in and take it as a green signal. You will now have money to put toward getting a new car. However, it will be up to you to choose the best time to sell your automobile, keeping in mind that its value decreases with each passing year and each further mile.

Age of the Car

Again, newer is always preferable. According to Progressive, a car’s value drops by more than 20% after the first year of ownership and then drops roughly 10% annually. Your vehicle may only be worth 40% of what you paid for it in five years. Waiting five years or more won’t make a difference because your car’s worth will start to level.

The Bottomline: Strategize Your Trade-In For Maximum Profits

You can guarantee a more excellent trade-in value for your car if you consider all the information in this article. Although you shouldn’t stress too much about the mileage, you should plan for necessary maintenance and repairs to save costs. You should get more money back if you take good care of the automobile and strive to keep it garage-stored. You can determine if it’s worth waiting for a better time to sell your car once you understand how its condition and mileage affect its value. Make sure you trade in near the end of the fiscal year or in the spring and summer if you choose to sell your automobile to a dealer to maximize income.

Cars Price Drops

When Will Used Car Prices Drop

You may be aware of the fact that the cost of almost every good has skyrocketed over the last two years and used cars aren’t an exception. With inventory shortages that even made their way in 2022, the prices of used cars are at an all-time high as of now. 

While buying used cars is cheaper compared to owning a new one, finding a good deal is challenging. As such, many drivers are wondering when the prices for used cars would drop. Thankfully, the prices of used cars are expected to drop in late 2022. Read on to find out more about it.

What about the current car market in the US?

There is no denying that the prices of used cars are on the rise. According to reports, the prices of used cars increased to a whopping 14% in December 2021 compared to the previous year. So, what is the reason for elevated prices? 

One of the reasons could be because of the high demand for vehicles this time around. According to HIS Markit, there would be around 15.5 million car sales in 2022. Now, that’s an increase of about 2.7% from the previous year. In addition, the global chip shortage everywhere is a major concern right now. 

As you know, these chips are an integral part of vehicles. Because there is a high demand for products that use the chips and the slow production of the same due to the COVID-19 pandemic, the prices for used cars witnessed an increase of about 19.1% over the past years. On average, the price for a vehicle stands at $25,904 at dealerships. 

What kind of vehicles are affected by the elevated prices?

The much older vehicles have seen a steep increase in value compared to newly used vehicles. Although the demand for SUVs and pickups tends to remain high than the normal cars such as crossovers, coupes, hatchbacks, and sedans, these are the vehicles that experienced the highest price.

However, there is a valid reason for that as well. No wonder, the production of new cars was deeply affected compared to the trucks and SUVs. Automakers were diverting their limited sources toward producing larger and more expensive models. 

However, it is not that these types of vehicles didn’t increase their prices. In fact, they did what others were doing. Despite that, the increased prices were relatively lower compared to the used car values. Here is some information about the hike in median pricing for used cars. The duration was from December 2019 to December 2021.

  • The price for used SUVs increased from 32% to 41%
  • The price for used pickups increased from 23% to 48%
  • And, the used car prices such as hatchbacks, coupes, and sedans increased from 40% to 52%

So, when would the prices for used cars come back down?

One thing you should understand is that used car prices depend on the extent of new vehicle production. However, it is expected that the production would recover mostly by late 2022. That way, you can expect used car prices to return to normal by the end of 2022 or during the first few months of 2023.

But the sad news is that the prices won’t return to what they used to be pre-pandemic. Still, it is predicted that the price drop would be about 20 to 30% after October 2022. Some experts even predict that the new normal where the prices were 54%, the new price would be around 68%.

Besides, many automotive experts are supporting the theory and they believe that the global chip shortage is due to end during the latter months of 2022. Hence, this should be the time when you may invest in used cars. If you are thinking about investing in a used car, wait for a few months. If you can hold on for another few months, you can save a lot of money. 

How to get yourself prepared for buying a used car?

Shoppers who have adequate time should wait for the opportune moment to buy used cars. In short, if you want to buy a used car, wait for some time and watch the prices fall. However, some people don’t want to wait for the right time to buy used cars. 

So, if you believe that you don’t need to wait for the right time and can pull off the purchase, here are some important factors that you should consider.

1. Plan ahead of the purchase

Even when the industry was hit by lower production of vehicles, the traditional way to buy vehicles still applies. Therefore, find out how much you intend to spend and stick with the budget you have in your mind. 

In addition, try to find out the best deal from private sellers and dealerships. Apart from that, the industry shortage means that you need to remain flexible and should be prepared as soon as you find out the right vehicle for your needs.

2. Think twice before applying for long-term loans

Although an auto loan for a long period might reduce monthly payments, it has some drawbacks. Certain things such as high cost of finance and high probability of experiencing upside down, which is investing more on a car than its value, are some of the important factors to consider.

This risk tends to increase when the value of used cars decreases in the upcoming years. A report from Experian states that a long-term auto loan carries higher payments in recent years than they used to be earlier. 

While the loan terms of 73 to 84-month increased from 19% to 25% in the 3rd quarter of 2021, the average monthly payment increased to $465 in 2021 from $410 a year before.

3. Leverage trade-in 

Elevated used-car prices especially on older models can surprise a buyer who has a car to trade in. As per reports, the trade-in equity experienced a rise of up to 88% from the previous year. 

If you want to avoid the risk, consider putting the trade-in equity to the down payment on used cars. That way, it would reduce the total amount needed to finance while dodging an expensive purchase.