Just Bought a Car? How Long Should You Wait to Trade it In?

Just Bought a Car? How Long Should You Wait to Trade it In?

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When you drove away in your new car purchase, it felt great. The shiny paint, the smell of the interior, and the sound of the engine all made it a special day. 

But now, after a short time (a couple of months or maybe even weeks), you're interested in trading your current car for something else. 

It could be that your new vehicle didn't meet expectations, and you want to get behind the wheel of something that better suits your needs. Or maybe it was more expensive than planned, and the monthly payments on your car loan are too much. 

But whatever the reason, can you trade in a car you just bought? 

Let's look at the details of trading in your recently purchased vehicle.

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How to trade in a car

Trading in a vehicle is a fast, easy way to purchase your next one and also put money down on the purchase price. 

All you have to do is decide on your preferred reseller, field offers, and then use the money as a down payment on your new-to-you car. Though trade-in prices are typically lower than those paid by a private party, the process is simple and can take as little as a few hours. 

Conversely, a private party sale can be a time-consuming hassle. You have to take many photos from different angles, write an advertisement, and answer the phone when potential buyers call. Even with all of that work complete, you still have tedious paperwork to fill out, like transferring the title and signing the bill of sale. 

All in all, it may take weeks or even months before you find a buyer and receive money for your vehicle. 

Trading in also offers the perk of saving you money on sales tax. Depending upon which state you live in, you may only pay sales tax on the amount left once you subtract your trade-in value. This vital benefit can save you thousands of dollars, keeping needed money in your bank account for other essential obligations, like vehicle maintenance or car insurance

When it's time for a new-to-you vehicle, you'll probably want to sell or trade in your old one. But selling to a private party can be a hassle. And how can you be sure you receive a fair trade-in offer? But when selling your car to Shift, there's no need to worry about any of that. All you'll have to do is enter the make, model, year, and mileage on Shift's easy-to-use free estimate calculator, and you'll instantly receive a purchase offer that's valid for seven days. You can get a fair offer, better than at the dealership, driven by powerful machine learning algorithms and tons of data. And with Shift there's no need to spend the extra time waxing and washing the car. A little dirt won't affect the quote, and we fully detail the cars ourselves before listing them for sale.

Can you trade in a car you just bought?

While there's no set rule on when you can trade in a newly purchased vehicle, it can pay to wait a while before doing so. 

Perhaps the most significant factor affecting how much you receive in return on a trade-in is how much equity you hold in the car. When the value of your vehicle exceeds the loan balance, you have what's known as "positive equity" and stand to pocket money on a trade-in. 

But if your remaining balance is more than your car's value, you hold negative equity, also referred to as being "upside down." In that scenario, you'll actually have to pay additional funds to a lender before your trade-in goes through. 

Though the possibility exists to roll your negative equity into a new auto loan, that only increases your financial burden and may not be a wise financial decision. 

Either way, waiting until you build up positive equity on your loan amount ensures you receive a good amount of money when you trade in your financed car. 

When you're in the market for your next car, buying used offers you the chance to save thousands versus a new vehicle. But where can you go for not only a great price but also a used vehicle that stands the test of time? Shift's certified mechanics perform extensive 150-point inspections on every car and have complete vehicle history reports, so you know your used car feels as good as new. Whether you need a Tesla, a sports car or a rugged pickup or SUV, Shift's has a large selection of fully inspected vehicles located across the country that are ready to go. The website is user-friendly, and you'll be able to find various makes and models to suit your needs and budget.

Other factors affecting trade-in value

When trading in your car, additional considerations are its mileage, overall condition, and time of year.

As the miles add up over the years, a vehicle's value depreciates. New cars typically lose 20 percent of their value in the first year alone.

However, at no point in a vehicle's mileage does it go through a sudden drop in value. More important to a car's trade-in value is how well an owner has maintained it and its overall condition. Service records and a vehicle history report can show your car's past maintenance and repairs, ownership history, and odometer readings, further increasing the value of your car.

More significant to a trade-in value is a car's model year. Vehicles three years or less in age can fetch 60-70 percent of their original value, even if they've racked up many miles.

Just like certain times of year make for better deals on your car purchase, the same is true when trading in. However, the best times to trade in a vehicle differ from car buying.

The first two quarters of the year typically bring better trade-in values for several reasons. The automotive market is strong during this time of year, driving the need for more inventory at car dealerships. And early in the calendar year, with new model introductions around 10 months away, a slightly used car can feel all the newer.

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How soon can you trade in a car in summary

You can trade in your vehicle at any point during ownership. But paying attention to several factors increases your chances of receiving a nice amount in return.

First among those is whether or not you hold positive equity in your car. The more positive equity you have, the greater amount of money you collect for your down payment. 

Other aspects affecting your trade-in's valuation like overall mechanical condition, model year, and the time of year you trade all go into determining how much you pocket for a down payment. 

And remember, bringing along service records and a vehicle history report can further demonstrate your vehicle's trustworthiness and show it's a good candidate for the used car market.

If you're ready to sell your car, van, pickup, or SUV, Shift's ready for you. See how easy it is to get a fair quote now.

2019 Audi RS 5 (from $71,950)

2019 Audi RS 5 (from $71,950)
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Author
Shift Editorial Team