How does trading in a car work?
Trading in your car usually involves selling your car to a dealership where you plan to buy a new or used car. To get the best trade-in offer for your car, it's important to research the value of your car, prepare your car before trading, and skillfully negotiate. If you're trading in a financed car, the dealer will work with you and your lender to apply the value of the trade-in to a new loan if there's a remaining balance.
Explore Progressive Answers' auto editorial guidelines to find out why you can trust the car insurance information you find here.
How to trade in your car
Trading in your car is often similar to privately selling a car. It requires gathering information about the vehicle's current value, preparing the vehicle for sale, and negotiating a price with the dealer:
Get an estimate on your car's resale value
Start by researching your current vehicle's value. Online pricing guides, such as Edmunds ® and Kelley Blue Book (KBB®), are reliable sources. Once you estimate the trade-in value, get quotes from local dealerships or online car shopping services. If you're getting an appraisal from a dealership, bring a copy of the estimated trade-in value. Learn about your vehicle's depreciation over time and compare quotes as you get them to narrow down where you trade in your car.
Prepare your car for trade-in
These tips will help you get the most value for your trade-in:
- Address mechanical issues. Your definition of maintenance may not be the same as your dealer's. Professionals can quickly spot problems that chip away at your trade-in value. If you've been skipping tune-ups or driving with minor defects, visit a mechanic before taking the car to the dealer.
- Gather your documents. To streamline the trade-in process and increase your bargaining power, be prepared with all the necessary paperwork. You need your vehicle's registration, car title, any reputable and competitive quotes or estimates you've received, your loan standing, if applicable, and maintenance receipts.
- Know your numbers. Trading in your car is a significant financial decision with moving parts, including the costs for getting it ready, the price you get for the vehicle, the cost of your new car, your current and future monthly car payments, financing options, special promotions, and more. Don't be afraid to use a calculator and compare offers so you can get the best deal on your new car with your trade-in.
Negotiate an offer
Make an appointment with the dealer where you intend to buy your next car, so they can appraise your trade-in. If possible, wait to negotiate until the end of the month, fiscal quarter, or end of the year, as these times are typically the best times to buy a car due to potential deals.
Close the deal
Remember, you can negotiate both the value of your trade-in and the cost of your new car. Try to talk to the salesperson about these two aspects of the deal separately. A good trade-in value isn't worth much if you pay too much for the new vehicle.
Update your insurance
To avoid any gaps in your coverage, notify your provider to make sure your new car is added, and your old car is removed. You may consider updating the coverages under your policy for your new car. If you're financing the new car, comprehensive and collision coverages are typically required by the lender.
Pro tip:
Read all the documents carefully during the trade-in paperwork signing process to ensure no errors. Ask about anything you don't understand. Correcting any issues at this point takes less time than changing a signed contract later.
What do you need to trade in your car?
Having the correct paperwork handy when trading in your car can help make the process go smoothly. Prevent making extra trips to track down the information by having these documents in hand for the trade-in vehicle:
- Proof of car insurance
- Title and registration
- Estimated trade-in value
- Maintenance records and service
- Keys, remotes, and the owner's manual
- The loan account number, if you still have a loan on the trade-in vehicle
- Your driver's license
Can you trade in a financed car?
If you're trading in your financed car that's brand new, the dealership will give you an amount they feel is appropriate based on the vehicle's make and model, condition, and market demand. Because the dealership needs to profit from the vehicle, it's unlikely that you'll receive an amount equivalent to what you paid. Once you accept the dealer's offer for your trade, the dealership will work with your lender and pay off your original loan using the value your trade.
If there's a remaining balance, the dealer may roll it into the loan on the new vehicle purchase. Your new loan can include the unpaid balance from your original loan, potentially resulting in higher monthly payments or a longer repayment period. Ensure that you clearly understand the terms of the new loan, the interest rate, the loan duration, and the total cost of the new loan before you sign the paperwork.
When should you trade in a car?
The best time to trade in a car is:
- When your car has value: The value of your trade-in depends on depreciation, mileage, and the market. Seasonal demand or the popularity of specific makes and models may increase the value of your car as it gets older, but generally, the longer you wait, the less you will get for your trade-in.
- When you need a new car: It might be the right time for a trade if your family has grown, your commute has changed, or you're seeking new features or a new driving experience.
- When your car is paid off: Trading in your car after it's paid off means you receive positive equity on the trade. If your car isn't paid off, and it's worth less than you owe when you trade in, you have negative equity.
- At the end of the month, quarter, or year: Dealers typically have sales goals to meet at these times, which may motivate them to offer you a more favorable deal on your trade-in.
- Before warranties expire: Most cars have new vehicle warranties for three years or 36,000 miles and powertrain warranties for five years or 60,000 miles, whichever comes first. Trading in your car before its warranties expire generally nets a higher trade-in value.
You can get estimates and offers online through the Progressive Car Trade-in Service, or you can negotiate with dealers in person or via email.

Quote car insurance online or give us a call
Learn more about car insurance policies.