Advantages of Trading in Your Vehicle

When you come to Sport Cadillac, we’re happy to set you up with a new vehicle. But what are you going to do with your old one? Consider trading it in, which gives you many advantages.

Lower Payments

Easily the biggest plus of trading in your vehicle is the credit that you receive for it when structuring your loan. The amount that has to be financed goes down, which also lowers your monthly payments and the total cost that you shell out. For example, suppose you’re looking at a $36,000 auto loan at 5 percent over a term of 60 months.

• Without a down payment, your estimated monthly payment runs $679 with total interest at $4,762 for a total cost of $40,762.
• With a trade-in valued at $6,000, the monthly payment drops to $566 with total interest at $3,968 for a total cost of $33,968. You save $6,794.

If you want some examples of how a trade-in can affect your payments, try our convenient Payment Estimator. You first select a model and trim and then customize a loan by entering a trade-in value and loan term, among other numbers. Using the current estimated APR, the estimator then shows you your estimated monthly payment. You can play with different trade-in values to see how that changes your payment.

Lower Taxes

When you buy a vehicle in Maryland, you must pay a 6% excise tax based on its sales price. A $36,000 car would have an excise tax of $2,160. If you have a trade-in, the state can give you an allowance that reduces your taxes. In this case, if your trade-in is valued at $6,000, your credit equals $360, which brings the excise tax down to $1,800.

Staying Above Water

You’re most likely aware that once you drive a car off our lot, it starts to lose value in a process known as depreciation. What you may not know is that new vehicles may depreciate by 20% or 30% in the first year alone.

If you obtain financing for your purchase without accounting for this loss of value, your loan soon goes underwater. You owe more money on the vehicle than what it is worth. This situation makes it impossible to sell the car because any proceeds that you get will not be able to pay off the loan.

Including a trade-in can keep your loan above water. For example, if your trade-in is worth 20 percent of the value of the purchase, your loan will go down by that much. Put more simply, the value of your vehicle can go down by 20 percent but it will still be higher than what is remaining on the loan.

Convenience

You will put more money in your pocket if you sell your car to a third party instead of trading it in with us. Your buyer may be able to pay up to the high blue book value, depending on whether you took care of your vehicle. We can only offer the wholesale value because we have to make money in trying to sell it.

But you're going to have to prep your vehicle to look good, take nice pictures, place an ad, field phone calls from potential buyers, arrange for them to come down and test drive your vehicle, haggle over the price, and hope that the check that they give you in payment will not bounce. You then have to find a way to either get to or from our dealership to buy your new car.

Trading in your vehicle is a model of convenience. You simply drive to our dealership, pick up your new car, and hand over the keys to your old one. You're done after you take off with your new purchase.

Next Steps

Now that you’ve seen the pluses of a trade-in, you may want to take advantage of one for your next purchase. Give the sales team at Sport Cadillac a call. We can answer any questions you have and may be able to estimate what your trade-in is worth. Better yet, head down to our dealership with your old vehicle and we’ll be able to assess its value while you test drive one of our models.