To determine the trade-in price of a used car, dealerships consider factors such as the condition and age of the vehicle, the potential resale value and the cost of repairs and refurbishment. Dealers also consider whether the trade-in is going for cash or toward the purchase of a different vehicle.
Money is usually the most important factor in determining a car's trade-in price. The dealer considers the potential resale value of the car and chooses a lower trade-in price. The cost difference allows the dealer to clean the vehicle, fix any damages and make a profit from the sale. Cars that are dirty or in disrepair often have lower trade-in values.
The dealer's current inventory and sale history also impact the trade-in value. If the dealer knows that the car is going sit for months before selling, the price may be lower. In-demand vehicles usually have higher trade-in prices.
Dealers also consider the nature of the trade-in when setting a price. If the trade-in value is being subtracted from the cost of a new car, it may be higher than a trade paid in cash. Occasionally, a vehicle's trade-in price is affected by the timing of the transaction or by special promotions at the dealership.