Do You Accept Trade-Ins as a Down Payment?
As a car buyer, you are always looking for ways to lower the amount that you pay for your next vehicle. Paying less for the vehicle lowers your monthly payment while allowing you to build equity in the car much quicker. One way to build equity in your new car is to trade in your old car to increase the amount of your down payment.
Most Dealers Accept Trades as a Down Payment
The good news is that almost all dealers will accept a trade as part of a down payment. In fact, most dealers will consider the value of your old car to be your down payment. For example, if your car was worth $2,000, that $2,000 would be considered a down payment on your next vehicle. This can be useful if a lender requires you to put money down as a condition for getting a vehicle loan.
What Determines the Value of Your Down Payment?
There are many factors that determine the value of your down payment. First, the dealer will already have a figure in mind based on the condition of your car. A car in good condition is going to be worth more than a car that is not in good shape because it will cost more to recondition before being sold. Next, the dealer will determine its value based on the demand for the vehicle that you are trading in. If you have a car that is in high demand, you will get more for it as opposed to a car that is not in demand. Taking those things into account, a dealer will consult a value chart that determines how much can be offered for the car to make a profit from it.
Can You Negotiate the Value of Your Trade?
As with anything else, you should feel free to negotiate the value of any trade that you would like to make. A dealer may be willing to offer more for your trade to help you qualify for a loan or to make you feel better about making the trade in the first place. If you don’t like the offer that you have been given, you can walk away from negotiations and try to sell the car or get a better offer from another dealer.
Depending on the type of car that you have, a dealer may not risk losing a deal because you were $500 apart on the value of your trade. For those who are savvy enough to do so, it may be possible to split part of your trade between a down payment on your purchase and a check that you can put in the bank to help pay bills our build your savings.
One of the most important questions that you should ask a dealer is whether or not that dealer accepts trades. If not, you should look for one that does if you are planning to use your trade as a down payment toward your next vehicle.