Trading in a car when you buy a new one is pretty standard, but what if you want to trade in two vehicles? Is that even possible?
The short answer is: Yes! You can trade 2 cars in for 1. It’s definitely less common, but it’s a viable option for some car buyers. Whether it’s a good option for you is another question entirely.
This article will explore the ins and outs of trading in two cars for one, including how dealerships value vehicles, how loans work in these situations, what dealerships think about this scenario, and the potential benefits and drawbacks you need to consider before making a decision.
The valuation game: Assessing your trade-ins
Before you head to the dealership, it’s important to get a solid handle on what your current cars are worth. This helps you negotiate from a position of strength and avoid getting lowballed.
Determining the value of each vehicle
Accurate valuations are key. Start by using online tools like Kelley Blue Book, Edmunds, and NADAguides to get an initial estimate. These sites will ask you about the condition of each vehicle, typically rating it as excellent, good, fair, or poor.
Keep in mind that several factors affect trade-in value:
- Mileage
- Age
- Condition (interior, exterior, mechanical)
- Accident history
- Demand for the specific make and model
Managing expectations
It’s vital to understand the difference between retail value and trade-in value. Dealers need to make a profit, so trade-in offers are typically lower than what you could get selling privately. That’s just a reality of the car business.
Also, be realistic about the condition of your cars. It’s easy to overestimate the value based on sentimental attachment, but dealers are looking at cold, hard facts.
The dealer’s perspective: why they might (or might not) accept
From the dealer’s perspective, there are a few considerations when it comes to accepting two cars in trade for one.
Inventory considerations
Dealers have to think about what they already have on the lot and what their customers are looking for. They might be super interested in one of your cars but not the other, depending on current inventory and what’s selling fast.
Older cars or less popular models can be harder to sell, so the dealer might not be as enthusiastic about taking them as trade-ins.
Profit margins and risk
Dealers are in the business to make money, so they’ll need to make a profit on both trade-ins. That means they’ll be taking a close look at how much it’ll cost to get each car ready to sell, market it, and actually sell it.
They’ll also be assessing the risk associated with each car. If a car has a history of problems or accidents, it’s a higher risk for the dealer.
Negotiation strategies
When you’re negotiating, try to keep the trade-in discussion separate from the price of the new car. Focus on the total out-the-door price.
And, most importantly, be ready to walk away if you don’t like the offer. There are plenty of dealerships out there, and you want to make sure you’re getting a fair deal.
Financing and loan implications
Trading in two cars for one can complicate the financing process, so it’s good to understand how it all works before you head to the dealership.
Impact on loan amount
The trade-in value of your existing vehicles can significantly affect the amount of money you’ll need to borrow. The higher the trade-in value, the less you’ll need to finance. A larger down payment can sometimes get you a lower interest rate on your loan.
Negative equity considerations
If you owe more on your current car loans than the cars are worth, that’s called “negative equity.” If you trade in a car with negative equity, that amount is generally rolled into your new car loan. This means you’ll be borrowing more money overall, which can increase your monthly payments and the total amount of interest you pay.
If you’re trading in a car with negative equity, you have a few options: You can pay off the difference upfront, choose a less expensive car, or wait until you’ve paid down the loan enough that the negative equity is reduced.
Loan approval process
Lenders will assess your creditworthiness and ability to repay the loan. Having a good credit score is essential for getting approved for a car loan at a competitive interest rate.
Benefits and drawbacks of trading two for one
Trading in two cars for one can streamline your life, but it can also complicate the deal and leave you with less money in your pocket. Here are some of the potential benefits and drawbacks.
Potential benefits
- Simplifying your life. Maintaining one car is easier than keeping up with two.
- Lowering costs. With only one car, you’ll only have one insurance bill and one maintenance schedule.
- Upgrading to a newer, more reliable car. Trading in older vehicles can give you the chance to upgrade to a newer model that’s less likely to need repairs.
Potential drawbacks
- Lower trade-in values. Dealerships don’t always offer the best price for trade-ins. You might get more money if you sell the cars yourself.
- Complicated financing. If you have negative equity on either car, rolling that debt into a new car loan could make the loan harder to pay off.
- Emotional attachment. Sometimes, it’s hard to part with vehicles that have been part of your family for years.
Wrapping Up
Trading in two cars for one is possible, but it’s important to go in with your eyes open and a clear plan. Make sure you know the actual market value of each car you’re trading in and how the dealer will likely view the deal. It’s also smart to get pre-approved for financing, so you know your options.
There are pros and cons to this strategy. You could simplify your finances and reduce your monthly payments. But you also might not get the best value for your trade-ins, and you could end up paying more in the long run.
Ultimately, the right choice depends on your individual situation, your transportation needs, and how comfortable you are negotiating. Take a close look at your finances, and if you need extra guidance, talk with a financial advisor before you make a decision.