Is Now the Best Time to Trade in a Car?

couple trading in car at dealership

Is Now the Best Time to Trade in a Car?

If you want to upgrade your vehicle to a newer model, you’re probably asking yourself—is now the best time to trade in your car? Currently, low vehicle inventories and constant supply chain problems have made it challenging for car manufacturers to build new cars. Therefore, car buyers have been struggling to find new cars to buy and the resale value of used cars has gone up significantly as a result.

If you have a vehicle to trade in right now, it could be worth your while. Here are some things to consider before trading in your car to determine when it makes sense and when it doesn’t.

When does it make sense to trade in your car?

During the past couple of years, the demand for new cars and lack of supply has left many dealerships emptier than usual. This has caused car buyers who originally wanted to buy a new vehicle to consider buying a used vehicle instead.

When demand goes up, so does the price. In February 2022, the average new car sold for around $46,000 while the average used car sold for around $27,000. Your used car is worth a lot more now than it was a couple years ago, even factoring in the miles you’ve more than likely added to it over that time. However, the bottom line is no matter whether a car buyer is planning to buy new or used, it’s going to cost more than it would have two years ago.

With this in mind, it really only makes sense to trade in your car in certain situations. If you aren’t looking to buy a new car, but have an extra vehicle you’ve been thinking about selling, now would be the perfect time to trade it in. Dealerships are gladly buying any cars that come their way right now. You don’t have to buy something new in exchange. They’ll give you a check just for handing over the keys to your used car.

If your used car is starting to accumulate expensive repairs, to the point where repair costs are greater than the car’s value, this is a good time to consider a trade in.

When does it not make sense to trade in your car?

If you can get a little more use out of your current car while avoiding costly maintenance or repairs, it may be in your best interest to keep the vehicle for now. While it’s true you’ll get more for the trade-in value of your used car, you’ll still have to deal with the higher-than-normal price of new cars. The current car market won’t be like this forever. Car prices will eventually go down making both new and used cars less expensive in the future.

If you decide to keep your current vehicle and you’re still making payments on it, refinancing your auto loan can be a great way to lower your interest rate, decrease your monthly payment, pay off your loan sooner or all three. When you refinance your car loan from another lender with us, you can choose to lower your rate by one percent or receive $100 cash back. Plus, you can skip your payment for 90 days. The benefits of refinancing could also make it more worthwhile to keep your current car.  

Before you trade in your vehicle, ask yourself if it makes sense. If you have a car to sell that you don’t need to replace, now is a great time to sell it. If you want to trade in your car for a newer model, it might make more sense to wait for car prices to go down, unless the repairs on your vehicle outweigh its value.