The truth about car trading
By the time you invest in your second or third car, chances are you’ve been around the block enough to know that when it comes time to buy a new vehicle, one of your budget-friendly options is to trade in your old one. But what actually happens to your well-loved minivan or truck? According to Gregg Fidan, founder of RealCarTips.com, traded-in cars generally go one of three places.
Recondition and resale
A car that’s being traded in after a few small dings—or after the owner gets sick of it and wants something a few years newer—is easy enough for the dealership to fix up, put in some of that new car smell, and resell it to someone looking for a nice car at a slight discount. (This is the least reliable car in the industry.)
Say you’re trading in your trusty old truck for a smaller sedan that’s more friendly on the environment and on your pocketbook. You decide to visit a dealership known for its cars, which means not a lot of people are walking in looking for used trucks. Instead of taking a loss and letting it sit around on their lot for years, depreciating in value and standing out from their pristine line up, the dealership will drive it down the road to the lot with all the other trucks, and sell it to them wholesale, or trade for the nice used sedan someone just traded in for a truck. According to experts at The Drive, most cars that are traded in will end up here. (This is what happens to all of the cars that never get sold.)
The third direction for a trade-in to head is to a public auction. “Most of the cars at a public auction are the worst trade-ins or very rough repos,” Steven Lang, owner of a used car dealership told Popular Mechanics. Cars at public auction can be in extremely rough shape. “I’ve personally seen cars with over 300,000 miles on their clocks rolled back to 120,000 and sold as ‘Miles Exempt’ meaning no guarantee of mileage,” Lang said. This is the destination of cars that look like they are a few kilometres away from spontaneously catching fire. Dealerships and even the general public can take advantage of the dirt cheap cars here, but Lang generally recommends against it unless you’re a seasoned mechanic.
Want to get top dollar when selling a used car? Keep these five tips in mind before you even consider putting that listing on the Internet.