Every year around 3.2 million[i] people in Britain trade in their old car for a new one. Trading in your old car to buy a new one, also called part-exchange is a process where you sell your old car to a dealer and the price the dealer gives you for the old car is set off against the price of the new car you are going to buy.
It’s important to understand when it is the right time is to part exchange your old car. Especially since it may sometimes make more sense to sell your old car privately instead of going for a part exchange[ii].
Here are some of the factors you need to keep in mind if you are contemplating trading your old car for a new one.
Age of the Car
It’s a well-known fact that the most major loss in value of a car happens the moment it goes from the showroom onto the road. In fact, the first 9 months is when the car’s value depreciates most dramatically.
A study shows that cars when cars are 5 years old their failure rate is the maximum and things go wrong after 60,000 miles. So if you choose to sell too early you will lose out on car value due to steep depreciation but if you leave it till too late then you may end up getting a very low value for the car as the running and reliability of the car comes into question. Finding the sweet spot is essential here.
Time Left on the MOT
The time left on your MOT[iii] (a test of car safety in the UK, compulsory for all vehicles over 3 years old) can also be a factor in the price you get for your vehicle. If your MOT test is due and has not yet been done, then that will be a factor in the pricing of your vehicle when you want to trade it in.
At the same time, if you sell your vehicle right after the MOT, then you end up spending money on the test and don’t drive the car afterwards. Selling your car a few months after the MOT is a good idea as you don’t get penalized for not having taken the MOT and you still get some driving time after your MOT.
Avoid Bad Timing
In some cases, there can be factors[iv] outside your influence that can drive down the price of the car you are selling. For example, you may be selling a Ford and if Ford ended up selling some cars to the daily rental which are now due to come on the market, this may drive down the price of your car through no fault of your own.
It is important to keep an eye on such external trends and events and time your car sale accordingly.
Part Exchange vs Private Sale
It’s important to know whether you are better off selling your car privately[v] to a dealer or part exchanging it. In most cases, it is easier to get a higher price while selling your car privately because dealers are less likely to drive a hard bargain when they are buying in cash. You may also end up selling to the final car owner who is likely to pay more for the car.
At the same time, a lot of dealers[vi] do end up giving you a good price on the new car when you are trading in your old one, and this may often make it more lucrative to part exchange your car than to sell it privately. Moreover, the convenience and ease that part exchange comes with should also be taken into account while making the decision.
The most important thing when trading your car for a new one is to be fully aware of its value and to make sure the timing is right. This way you can get a good deal on your old car and go home with a brand new one.