Short answer
Your trade-in value is what a dealer will pay to buy your car and resell it. It is lower than a private sale price. In Ontario you only pay HST on the gap between the new car and your trade, which can close much of that difference.
We looked up what your exact car sold for and then offered $1,000 to $2,000 less than we could pay. Never take the first trade number because it is built to move up.
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How do dealers work out your trade-in value?
The dealer starts with what your car sells for at auction or on their lot. Then they take off the cost to fix it and the profit they need to resell it.
Age and kilometres matter most. Condition comes next. Dents, worn tires and missing keys all cut the number.
Demand counts too. A car that sells fast in your area is worth more to the dealer. A car that sits for months is worth less.
So two dealers can give you two very different offers for the same car. That is why one offer is never enough.
Do you save tax with a trade-in in Ontario?
Yes. In Ontario you pay HST on the price of the new car minus your trade-in value. You do not pay tax on the full price.
AutoTrader.ca shows how this works. Take a $20,000 car with a $10,000 trade. You pay 13% HST on $10,000 and save $1,300 in tax.
Sell the car on your own and you lose that tax break. A private sale has to beat the trade offer by more than the tax you save. It also takes your time to list and show the car.
Other provinces have their own rules. Ask the dealer how tax works on a trade where you live.
Should you trade in or sell your car on your own?
A private sale often brings a higher price. In the AutoTrader.ca example the private buyer pays $5,000 more than the dealer. That beats the $1,300 tax break by a wide gap.
But a private sale takes work. You list the car and answer calls. You meet strangers and deal with payment safety.
A trade-in is fast. You hand over the keys on the day you pick up your new car. Pick the path that fits your time and your car.
If you owe money on the car a private sale gets harder. The buyer needs the loan paid off before the car changes hands.
How can you raise your trade-in value?
Clean the car inside and out before you show it. Bring both keys and your service records. Fix small things that cost little but look bad.
Get a written offer from 2 or 3 buyers before you visit the dealer. That is your real trade-in value. Online buyers and other dealers will give you a number.
Keep the trade and the new car price apart. Settle the new car price first.
Then bring up the trade. When the two mix the dealer can move money from one to the other.
How do you negotiate your trade-in value with a dealer?
Show the dealer your highest written offer. Ask them to match it or beat it. Most dealers will move to keep the deal.
Look at the gap and not just the trade number. A high trade offer means little if the new car price went up. The gap between the two is what you pay.
Do not owe more than the car is worth if you can help it. FCAC warns that negative equity gets rolled into your next loan. A car broker can price your trade and the new car as one deal for you.
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