11 Tips for Buying a New Car and Trading in Your Old Car

Trading in your old car is a great way to lower the costs of buying a new one, but getting the most value from your old vehicle can be tricky. To score a great price on a new vehicle along with a great trade-in value at the dealership for your old car, follow these 11 steps.

1. Understand that you are buying a new vehicle and selling an old vehicle; always keep this process as two actions

This allows you to negotiate the best terms for each of these separate actions.

2. Narrow down your search to 75% need and 25% want. Use the internet check out various sites

In the end, our cars aren't good investments, since they depreciate fairly rapidly over time and as you use them. It's better to think of them as tools-and as a tool, you want to search for a car based mostly on your needs.

The internet is your best resource for conducting research. Be sure to check features, resale value, and compare prices before you set foot at the dealership. Many dealerships will also have their current new vehicle inventory online as well.

3. Clean your old vehicle for a good first impression and fix things necessary to pass state inspection

When selling a used car, the little things can make a big difference. Taking the time to clean and make your old vehicle look good can add hundreds of dollars to its perceived value.

4. Get pre-approved from your lending institution for a car loan

Getting pre-approved for a loan before you go to the dealership is important, since it gives you a clear idea of what you can afford. This way, you'll have an advantage when negotiating price, since you'll know exactly your price limits. A word of caution: keep your pre-approved limit to yourself during the negotiation.

5. When you go to a dealership, have a couple of vehicles in mind to be considered, but also keep an open mind to what else might be on the lot

Before talking to a salesperson, you're better off having a good idea of what you want. This way, you're less likely to be persuaded into a less-than-ideal purchase. Of course, shopping at a dealership allows a good opportunity to take a look around and see what you like, so don't rule out changing your mind completely.

6. If the salesperson asks if you have a trade-in, answer 'not at this time' and get back to looking

The dealership will try to use a trade-in as a way to get you to spend more money on a vehicle you might not need. Hold this card close to your chest, and don't let on that you're considering a trade-in just yet.

7. When you have found the car or truck you want, ask for all rebates, bonuses and benefits that apply to that vehicle

Before you get down to price, you want to have a good idea which deals are available or included. Keep these selling points at the back of your mind, and don't appear overly-excited about making a purchase.

8. Negotiate on the selling price and not the price after rebate and bonuses.

With rebates and bonuses, it can be confusing what the actual price of the vehicle is. Keep things clear and straightforward by only negotiating from the selling price, or the car's "sticker price." You should also understand that new vehicles have very little room to negotiate down, and prepare yourself to walk away if you can't reach an acceptable deal.

9. Now you can negotiate a price for your trade-in.

Congratulations! You've arrived at a buying price for the new vehicle that you're happy with, and you can now bring up that you're interested in negotiating a price for your trade-in. Since you've held off on mentioning your trade-in you'll be able to take full-advantage of any bonuses that might be available.

If you have checked on-line for a trade-in value, you should understand that the price is calculated generally and may be subject to a geographic location and to the eyes and needs of the dealership.

10. Don't let the dealership work a deal based on a monthly payment

Dealers will sometimes ask how much of a monthly payment you can afford in an attempt to get you to pay more overall. You've already met with your lending institution, so your final deal should be based on dollar value, not what you can afford monthly.

11. Your lending institution gave you a borrowing rate; give that to the dealership to match and have them do the paper work through your lending institution.

Finally, it's time to finish up all the paperwork and drive your new vehicle home. The dealership should be able to work through your lending institution, and if you've followed all 11 steps you most likely scored a great deal!