When buying a new car, a lot of motorists may choose to part-exchange their current vehicle to save some money on a deal and the hassle of selling it on privately.
In our tips for buying a new car guide, we summarised how it works and what you would need to consider, but in this guide, we'll explore the different methods of part exchanging and its pros and cons.
What does part-exchanging a car mean?
A part-exchange involves agreeing the value of your old car and using this equity to help finance another car. When both parties are satisfied, the dealership will then take the old car off your hands on a convenient date, usually when your new car is ready for collection.
Methods of part-exchanging a car
Firstly, find out if your new car retailer offers a part-exchange service. If they do, arrange a meeting where they can inspect and value your car. If you are happy with the amount offered you can proceed with the deal.
It is also possible to arrange a part-exchange with some dealerships online. However, like all things related to online car buying and selling, there are potential issues to consider.
Online offers are often lower, because they can't inspect the car in advance. Keep in mind as well that if you arrange a part-exchange online, the valuation may be subject to change when the car is collected and checked.
Advantages of part-exchanging
There are two clear benefits to part-exchanging your current, older car while buying a new one. One is that you’ll immediately cut down the price for your new car. If you are downsizing to a smaller and cheaper category of car (swapping an estate for a city car for example), a huge chunk of the price could potentially be removed in a flash.
The other benefit is that you’ll also address the issue of what to do with your older car, assuming the new purchase is meant as a replacement of course. Within one visit to the dealer, you can turn up in a used car and leave in a brand new one.
Parting ways with your old car through a part-exchange is less hassle than selling it on separately. There will be no need to take out a classified ad or negotiate with potential buyers who may decide not to buy the vehicle.
The amount of time you’ll spend with the older car in your possession is not known, so you could need to tax and insure two vehicles. These sort of doubts are wiped away when part-exchanging.
Disadvantages of part exchanging
While part-exchanging is a fast and easy method of getting rid of your old car, it’s possible the dealer won’t give you as much money for it as you could possibly acquire. Selling your old car online or through a classified ad, while probably a longer process, could prove more profitable.
Another potential issue with part-exchanging an old car is dealing with two sets of negotiation – one for the new car and another for the part-exchange of your old car. To avoid potential pitfalls around these negotiations, go through a trusted dealership network, and come prepped with as much info as possible.
What should I do before and during a part-exchange?
First of all, the most important thing to know is the value of the car you are currently driving. The internet can be a very useful tool for this, since it’s where you can search for similar cars to yours in order to gauge the value of the car.
Remember to take into account mileage, service history and the condition of the car. You’ll also need some documents, including the V5C and MOT certificates, just as you would need them if you were selling the car privately.
By going into the dealership equipped with all of this information, it allows the seller and the salesperson to reach an agreement more quickly and should ensure a good deal for the seller.
On what may sound like a minor but still a significant note, it may be a good idea to get the car you are part-exchanging washed and tidied up. A car that’s dirty or filled with any litter may have its valuation knocked down when it arrives at the dealership.
Of course, you can always walk away if the deal is not satisfactory. Always be prepared to explore other avenues for selling your car if the part-exchange deals on offer do not suit you.
What could reduce the value of a car I part-exchange?
Obviously, any repair work needed or damage to the car will reduce the price, but this is where prior research will be useful.
Other things that will reduce the price include an incomplete service history and the lack of an MoT. Most dealerships will check the car mechanically before agreeing to a part-exchange, but will drastically reduce the amount offered if the car does not have a valid MoT certificate.