TL;DR
Trading in your vehicle at a dealership in Canada allows you to apply its value toward the purchase of a new or used car, simplifying the process compared to private sales. Dealerships assess trade-in value based on factors like the car's year, make, model, trim level, mileage, condition, and current market conditions. In Ontario, you can even save on taxes because the trade-in value is subtracted from the price of the new car, lowering the taxable amount. Trading in your car also saves time and effort by avoiding the complexities of private sales, such as handling safety certifications, paperwork, and dealing with potential buyers. It's also possible to trade in a vehicle that's still under financing or leasing, though this may involve additional considerations like handling negative equity or lease termination fees.
When you trade in a car at a dealership, you are using the value of your trade-in car to reduce the total price of a new purchase. The amount discounted off of the new purchase will vary depending on the trade-in car’s model, year, and condition. After the exchange, the dealership will then refurbish your car for resale as a used vehicle. If you aren't looking to make a new purchase, you can instead get cash for your trade-in vehicle.
A trade-in vehicle is a vehicle you exchange at a dealership when you buy a new one. In other words, you are selling your trade-in vehicle to the dealership to replace it with another vehicle.
Step 1: Get an Initial Estimate for Your Car's Trade-In Value
When you're shopping for a new car, start by finding out what your old car is worth. This helps you plan your budget. You can estimate your car’s trade-in value in a few ways:
Step 2: Prepare and Clean Your Trade-In Vehicle
While your initial estimate can give you a ballpark of how much your trade-in vehicle is worth, the actual trade-in value depends on your car's condition. To get the best value, take time to do basic maintenance and a thorough cleaning before the dealership appraisal.
Step 3: Visit the Dealership
Finally, go to the dealership where you plan to buy your new car. You might need to make an appointment first. At the dealership, they may need to inspect and test your car, which can take a few hours, before giving you a final valuation.
That’s it! Trading in a car is straightforward. It can be a quick and hassle-free process. When you accept a dealer’s trade-in offer, you can either take the value in cash or apply it toward the purchase of a new or used vehicle.
When a dealership gives you a trade-in value for your car, they consider several key factors:
Trading in your car in Ontario comes with several perks:
If you're still leasing or owe money on a loan for your vehicle, you might be wondering if you can still use it as a trade-in. Or maybe your car has unique circumstances, and you're unsure how they affect trading it in. Here are quick answers to those questions:
It depends on your lease term and financial situation. Here’s what to consider:
For more detailed information, check out our guide to getting out of a lease early.
Yes, you can trade-in a car with an outstanding loan. Here are the two scenarios:
Even with negative equity, you can still trade-in your car. Negative equity doesn’t disappear and it isn`t paid by the dealer when the trade-in is sold. It gets added to your debt and you are responsible for paying it off. Here’s how it works:
Trading in a car with excessive negative equity is generally not recommended. Some financial institutions may also limit how much negative equity they are willing to finance.
Yes, you can trade-in your car for a used vehicle. When you trade-in your old car at a dealership, you’re not limited to buying a new car. You can use the trade-in value towards a new or used car, or even keep the money from the trade-in. The choice is yours!
You can trade-in a financed car anytime if you find a dealership willing to make an offer. However, it's best to wait until you've made enough payments to have positive equity, meaning the car's trade-in value is higher than what you owe on the loan. This way, the trade-in value can pay off the loan and give you extra savings on your new car.
Yes, you can use a trade-in car for a lease. The value of your trade-in is applied toward the lease of another vehicle.
Trading in a car in Canada can lead to significant tax savings. Often called a car trade-in tax credit, these savings don’t come from a government incentive program but simply from how tax is calculated. When you trade in a car, the trade-in value is deducted from the purchase price of the new vehicle, and you only pay tax on the reduced amount.
When you’re ready to sell or trade in your car, having records of all the services, repairs, and maintenance work done on the vehicle can boost its resale value. A well-documented maintenance history shows that you've taken good care of the car, making potential buyers more willing to pay your asking price. It can also help you get a better trade-in offer at a dealership. A simple way to keep track is by storing all your maintenance receipts in an envelope or folder in your glove compartment.
Timing the market to get the most value for your car can be tricky. The longer you keep your vehicle, the more it depreciates. If you're still making payments, you might end up owing more than the car is worth. For these reasons, there's no exact rule, but the best time to trade in your car is when you have positive equity and you're ready for something new.
By trading in your car, you can take advantage of huge tax savings and trade-in bonuses to maximize the value of your trade-in car. To some people, the added security and saved time and hassle is priceless as well. If these benefits appeal to you, trading in your car is an easy choice.
How to Buy a Used Car in Ontario
How to Test Drive a Car
How to Buy a Car in Ontario as an Immigrant
How to Lease or Finance a Car in Ontario
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