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Trade-In Vs Down Payment on a Car: Which is Better?

Trade-In Vs Down Payment on a Car: Which is Better?

This question used to have a simple answer. Given the choice to trade in or use a down payment on your next car, the latter would always win. There’s now a third way. Sell your car to the dealership separately.


This option offers more flexibility than trading in and a simpler, faster and safer way to sell a car than selling privately.


Let’s explore this a little more.

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Is it better to use a trade in or use a down payment for a new car?


Both will work when you’re buying a new car. Most dealership don’t mind where the money comes from as long as it’s free and clear and obtained legally!


Trading in is still a very viable way to exchange one car for another. There’s a lot of paperwork to manage but it’s a simple process.


It does depend on you buying your car from that dealership, which may not be the best option.


For example, if you’re selling a Ford and buying a Kia, the Kia dealership won’t offer top dollar for the Ford because they don’t have a ready market for it. You would get more selling it to a Ford dealership because they have a ready market.


In this situation, a down payment works best. You can sell your Ford to Northway Ford for example and get a good price. You can then go to Georgetown Kia or us here at Car Nation Canada Direct and buy whatever car you want from our lots.


Money on the table


There are also times during a trade in where customers get confused with all the numbers and can accept a lower offer on their old car or ignore the opportunity for a discount on their new one.


Keeping the two transactions separate avoids that.


You can sell your car to a dealership and take the cash to use as a down payment. One transaction, one set of numbers and only one price to worry about.


We think this is the best option, so, in answer to the question in the headline, in many situations, using a down payment is best.


Selling your car to a dealership for the down payment


If flexibility is important or you prioritize convenience, simplicity and safety, selling to a dealership makes most sense.


It’s far better than selling privately that’s for sure!


The process is fast and painless too.


Prepare your car – Get your car ready to sell. Clean it up, make any minor repairs, get the service paperwork together, get all the work and maintenance receipts together and make your car look as good as it can.


Make an appointment with an appraiser – You can stop by and have your car valued but you’ll find it more convenient to book an appointment as there’s no waiting around. The appraiser will inspect the car, take it for a short test drive to make sure everything works and provide a value.


Accept the offer – Depending on the value, you can accept the offer or negotiate it. All our offers are fair and reflect current market conditions so there shouldn’t be any disappointment there!


Get paid – Aside from the sales paperwork, it’s just a case of accepting the offer and doing the deal. Once the paperwork is signed, we’ll pay directly into your bank.


You can then use the cash as a down payment on your next car, wherever you’re buying it from!


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