10 Undeniable Signs It’s Time to Trade In Your Car

It sure looked like the best car on the lot when you bought it, and perhaps it served you well for some time. Now, though, you’re ready to trade it in. Maybe it’s just a poor fit for your family, or you’ve gone through some lifestyle changes or financial strains that make it time to move on.

If you hope to lower your financial stress by getting a new car, upgrading — or even downgrading — your old model could be beneficial. Here are the 10 most important signs to look for to know when it might be time to trade in your car.

Over time, maintaining your car may be expensive. Vehicle repair costs are rising, with the Federal Reserve Bank of Minneapolis reporting a 17% increase in 2022. Even putting routine expenses aside, if your vehicle requires frequent repairs beyond oil changes and tire rotations, it may be time to trade it in.

Components wear down and should be an expected cost of owning a car. However, as those repairs increase in extensiveness and price, they may no longer fit your budget.

Gas prices are unpredictable these days, making it more expensive to commute to and from work, go to the grocery store, or take a cross-country adventure. If you know your car isn’t giving you great gas mileage any longer, it’s time to trade it in.

That’s especially true if your driving habits are slightly different now than when you bought the car. Perhaps you have a new job requiring more time spent in the car — a more fuel-efficient vehicle could keep more money in your budget.

Maybe you’re still driving the car you had before you had kids, took on a hobby requiring lots of gear, or took a job 45 minutes away — and maybe it no longer fits the bill. If you spend a significant amount of time in your car, ensuring it fits your needs is critical.

Often, that means trading in the car for something new or a better overall fit. You may benefit from upgrading to an SUV if you’ve added family members or want to go off-roading. Or maybe you’re at a point in your life where having the top down on a summer day adds value.

When you buy a new car, expect a depreciation hit to happen quickly. In fact, during the first year, your car could lose about 20% of its original value alone. That’s usually the most significant loss, but the vehicle’s value will continue to fall year after year from this point on.

Considering that your auto loan may be upside down now, meaning you owe more than it’s worth, getting out of the vehicle could be your priority. Though difficult, you may be able to find a trade-in value that’s high enough to pay off your balance. It may not help you get out of debt fully, but it can help you get into a vehicle that may lighten your financial burden, especially if there’s demand for your vehicle’s make and model.

It’s not uncommon for a car buyer to find themselves facing regrets. You may be angry, frustrated, or just disappointed in your purchase. Many people are annoyed that they got “talked into” purchasing this car on the dealership lot. Now, they just hate the car.

When your vehicle doesn’t fit your needs and you don’t like driving it, replacing it may be best for your peace of mind. Before you make that decision, consider what factors made you regret this purchase, such as the monthly payment, how much time you’ve put into it, or how much it lacks your lifestyle needs. Then, buy a new vehicle with fewer limitations.

For some people, the biggest problem related to car ownership is the financial strain. Realistically, budgets change and flex, and what was an affordable monthly payment to you may not be any longer. Considering the long-term implications of another three or more years on the loan, you may not want to sink so much money each month into this car.

You may be able to use your vehicle as a trade-in to lower the monthly payment for your next vehicle. With a few smart buying tips, including investing in a car that’s better in line with your current budget, you can make your current vehicle do some work for you.

A newer or more luxurious vehicle can also mean higher insurance prices. Additionally, a change to your driving record or even moving to a different zip code can cause rates to spike. If your current insurance rates are up, and you have compared several other providers before, now may be a good time to change your policy — or your ride.

A lower-valued car can also reduce some of your risk through lower insurance requirements and, ultimately, lower monthly premiums.

Another consideration is knowing the financial value of the car and your long-term objectives. You may have gotten a bad deal and overpaid for the car just because the salesperson was super friendly.

Selling it now may allow you to buy a car that will cost less in the long term. However, remember that the longer you hold onto your loan, the higher the cost of purchasing that car will be.

This could lower your interest rate, making your next car more affordable. Plus, doing this sooner could also increase the value of your trade-in.

Some experts believe trading in a car between 2–3 years old, with 30,000 and 40,000 miles on the odometer, is ideal for maximizing the value you get.

If that is where your car’s value stands right now, trading it in could get you the highest value you will get for the vehicle going forward. Ask for a trade-in quote to find out.

Trading in your car can be a smart move — both financially and personally. Trade-ins can even help you get out of debt by lowering the amount you finance on your new car loan, but do some research to ensure you get the best value.

Whether you need a cheaper, bigger, or more fuel-efficient car, finding a local dealership willing to accept your trade-in is critical. Not all dealerships offer the same trade-in value.