How to Trade In a Car Online

It's possible to trade in a car online and get a good deal at the same time.

Steven Lang | 

Dec 11, 2020 | 4 min read

Capital One

Originally published on May 26, 2020

When you get a new car, figuring out what to do with your old one can be a difficult decision. Selling a car privately is sometimes the best bet for maximizing your dollar amount, but it's not for everyone. Taking it to a dealership might make sense, too, especially if you take steps to maximize your car's trade-in value.

But what if you want to trade your car in, and you're not interested in going in-person and negotiating until you reach a price you can live with? It's possible to trade in a car online and get a good deal at the same time. Here's what you need to know about trading in your car online:

The newer (and nicer) your car is, the easier it is to trade in online

If your car is older and has its share of battle scars, trading it in online can be tough, since the dealer can't inspect the car in person. That's because some small cosmetic dings and dents can't be easily repaired, while hidden engine and transmission issues can cost far more to repair than the car is worth. Generally, the older a car is, the longer the list of issues that can make it difficult for a dealer to sell. As a result, older trade-ins frequently head to a wholesale (a.k.a. dealer-only) auction, instead of right back to the dealership lot. At those auctions, it's even tougher for many dealers to get the price they need to break even on those older used cars.

Nice and nearly new cars are the ones that will get the best returns, since they're less likely to have costly issues lurking beneath the surface. There's your opportunity: If your daily driver is still worth a fair amount, many established dealers will give you a healthy price for it.

You can do it even if you still owe on your car

You don't need to have your car paid off to trade it in. Many online dealerships will contact your lender to find out the remaining balance of your loan. It's not only an easier option for yourself, but the dealership should be able to get you a final check (for the value of your car minus the remainder of your loan and any fees), and sell your (now former) car to someone else that little bit faster.

Some will even pick your car up, but it might not be the best deal

If you absolutely want to avoid any in-person interaction when trading-in your car, you can certainly do that. However, you may be able to get a better price by driving directly to the dealership (or its delivery center, if it has one) after the online quote. For the buyer of your car (yes, the dealer is the buyer when you trade-in your car), seeing it in person represents a lot less risk. At the end of the day, this comes down to the dealer being able to accurately evaluate the condition and worth of the vehicle—see above re: the ease of trading in newer and nicer cars.

Don't forget about trade-in tax savings

This isn't exclusive to purchasing online, but it's still important: If you buy your new vehicle from the same place you trade in your old one, you could be eligible for some serious sales tax savings. That's because in many states, if you trade in one car and buy another in a single transaction, the taxable amount is only the difference between the cars' values. For example, if the dealer offers you $20,000 on your trade-in, and you buy a $40,000 vehicle, the taxable amount on your transaction is only $20,000. While sales tax varies by state, a 5% tax would translate to savings of $1,000.

If an offer is "take it or leave it," leave it is (usually) the smarter answer

Offers that give you no option for negotiation and little or no time for consideration—sometimes called "take it or leave it" offers—aren't always bad, but they're just a starting point. Many online dealers offer a reasonable price, but in a competitive market, cross-shopping offers is as easy as it is worthwhile. Some online dealers even encourage the practice so they have an opportunity to make a higher offer, with promises of cash if they can't beat a previous price.

There's no harm in asking if your dealership will take an online trade

Because it can be hard to accurately gauge the condition of a vehicle without inspecting it in person, not all dealers will be able to take your trade-in without at least the car being physically present. Still, every car and every situation is different, so if you have a dealership you'd prefer to work with, there's no harm in firing off an email to see if they're interested.

Steven Lang

Steven Lang is a special contributor to Capital One with nearly two decades of experience as an auto auctioneer, car dealer, and part owner of an auto auction. Some of the best-known auto publications turn to him for his expert insight. He is also the co-developer of the Long-Term Quality Index, a survey of vehicle reliability featuring over two million vehicles that have been inspected by professional mechanics.