It’s Time to Trade In

If you’re considering purchasing a new or used car, you may be wondering if you should trade your car in when you make your purchase. Given the seeming instability of our national economy right now, though, is trading in the way to go? In fact, it may just be the perfect time to trade in a used vehicle, and here’s why.

You’ve probably noticed that the pandemic has brought inflation, in part due to shortages in labor and supplies. One of the shortages that is troubling the automotive industry is a low supply of the microchips needed to manufacture new vehicles. What’s more, as communities begin to recover from the pandemic and people return to work, the demand for cars has become higher, leading to people depleting already low inventories at new and used car dealerships. Unfortunately, this means that there is currently a low supply of vehicles available for purchase. It’s not all bad news for people looking to trade in a used car. Because of the shortage in vehicles, used cars are often selling at a higher rate than new cars right now, making it a great time to initiate a used car trade in.

If you’ve visited any used car dealerships recently, you may also have noticed that vehicles are more expensive than they have been. In fact, the average used vehicle is about 30 percent more expensive than it would have been in a pre-pandemic market. With used car prices steadily increasing, your car may be worth more than it ever has been before. Selling your car could net you some extra cash and trading it in can certainly shave off some of the expense of the car you’ve been eyeing for purchase. In some cases, used vehicles with low mileage are selling for more than comparable new vehicles, even though they have been driven and have used oil in the engine. That makes this a very unusual time for the automotive market.

What if your car has maintenance or repair issues? Should you still try to trade it? Will you still get a decent price, even if the vehicle is less than perfect? The truth is that even if your car has issues, this is a good time to sell it because the demand for vehicles is high and the supply continues to be low. People desperate for vehicles are often willing to spring for repair costs when they’re having trouble finding cars to buy. Of course, in many cases, the car dealership inspects each used car accepted for trade and then provides reconditioning and certification, so that even if a car drives onto the lot with some problems, by the time it goes up for sale it’s certified reliable and safe.

Trading in a car can be an especially good move if your credit is not what you would like it to be. Traditionally, it’s been recommended that you exercise caution and patience when considering trading in a car, thinking about how much equity you have in the vehicle. If your vehicle has negative equity, a condition called being “upside down” on your loan, that means you owe more on the vehicle than it is actually worth. Some people may not realize that they are upside down on their car loan until it’s time to buy a new vehicle and they’re faced with the dilemma of having a trade in that actually detracts from the deal. If you’re ever faced with that situation, you have three options. The first is to pay off the amount you still owe on the auto loan, making up the difference out of your own pocket. You may also be able to roll the existing loan into a new loan. Of course, the downside of that plan in the current market is that auto prices are already high. If you have to roll your old loan into a new loan to pay off your used car and the car you’re purchasing, the loan amount will be fairly significant. If your credit is not great, you may not be approved for the loan you need. Of course, the third option is to wait to purchase a car until you’ve paid down your existing loan.

What does all of that have to do with the current situation in the automotive market? Simply this: if your car is worth more, you’re less likely to have negative equity. After all, you probably purchased your used vehicle back before the pandemic, when the price of cars was not as high as it is now. If the value of the car has gone up significantly since the time of purchase, you may have far better equity than you think you have. Even if you haven’t paid off your car loan, the value of your trade in may be enough to offset that debt and help reduce the amount of money you have to borrow in order to purchase your new vehicle.

If you’re looking for a new or used car dealer you can trust to walk you through trading in your car and help you get into a new vehicle, trust Dixie Buick GMC. We’ve been serving the community of Fort Myers, Florida since 1934, providing excellent service and helping people find the right cars to meet their needs. With an extensive online inventory and welcoming showroom, we work with customers to help them find the right new or used vehicle to for their lifestyles as well as their budgets. Buying a car can be an overwhelming process because there are so many options out there, but we’re here for you, from the trade in process, through working with your credit, to providing excellent service, performed by certified factory-trained technicians, after you’ve purchased your vehicle. To learn more about what our award-winning sales and service team can do for you, visit our showroom, browse vehicles on our website, give us a call at 239-330-9918, or contact us online.