When is the best time to Trade in your Car?

Best km level for a trade-in

Some people keep one eye on their km numbers at all times, trying not to put too many km's on their car so they won't hurt its value when the time comes to trade it in. But your car's range may not matter as much as you think.

Sure, the value of your car drops slightly with every 15 000 km you add, but there is no major drop-off at any certain milestone. Even the 100 000km is not a value-killer as long as the car is in good shape. The truth is, there is no magic number.

What matters more is the model year. If your car is only a few years from now, it is likely to retain 60%, or even up to 70%, of its original value. That remains true even if you racked up the km. Cars that are 5 years old or older, however, are less likely to reach those figures whether they were babied or not. Still, if your car is in good shape, it will retain value — dealers can often resell older vehicles much more quickly than newer ones. But when it comes to getting the most money for your trade-in, newer is better.

The best age of the car to trade in

Again, newer is better. Your car will hold more value the more recent it's the model year. As with mileage figures, there typically isn't one particular age when a car's value plummets. It will decline gradually but steadily. But by the time it's about 5 years old, its residual value has likely dropped significantly.

When it's between five to seven years past its model year, the decline in its value slows and mostly settles. So if you didn't trade in during the first five years of ownership, there's not much reason to rush to do it before the car turns 8. You'll get about the same amount of money back as long as the mileage doesn't skyrocket, so consider taking that extra time to build your savings for a down payment on something you really want.

The best point in the loan to trade in

If you took out a loan to buy the car, the best time to trade it in is a subjective decision that will differ for each person. But there is, objectively, the worst time.

We do not recommend trading in your vehicle if you still have a balance on the loan and have not yet earned any equity. This means you still owe more money than the car is actually worth and are underwater on the loan.

Instead, reach out to your creditor to find out how much you owe on the loan. Compare that to the estimated value of your car on a trade-in, and when its value is higher than the amount you owe, consider that green light. Now you'll have something to put toward buying a new vehicle. But it will be up to you to decide when you can get the most return, keeping in mind that your car declines in value with each passing year and each additional mile.

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