When you take out a loan for buying a new car, you usually need a deposit of some sort. Most car buyers have one readily available source of funds to get that deposit: their previous car. Of course, if you don’t already have a car or if you are looking for a second car, this option won’t be there. But you can turn your old set of wheels into the deposit for the new one.
The easiest way that you can do this is by trading in your old vehicle, using it as part payment for the new one. Many car sales companies are happy enough to do this. The advantage of this is that it’s quick and it’s easy you just turn up with what you’re trading in and get the value of your old car taken off the price of the new one. You don’t have to fool around waiting for someone to come around to test-drive the car or pay for advertising. The downside is that you might not be able to get as much as you hoped for the trade-in. At some car dealerships, they have a set amount that they take off for trade-ins. You can try haggling, but it doesn’t always work. The amount you’ll get offered for the trade in will depend a lot on the age of your old car, the condition it’s in and even the make. The car salesperson is planning to make a profit off your trade-in, so naturally he/she will try to make that profit as big as possible when coming up with what your old wheels are worth.
The other option you have for turning your old car into ready money is to sell it. This can be done by putting it up for sale on the side of the road with a sign on the window in time-honoured fashion, or by listing it on an online site, either with or without an auction. The advantage of this method is that you can get a better price for your old car (though not always) you probably aren’t trying to make a profit from the sale. You’re in control of the price, although if you’ve completely overpriced your old vehicle, you won’t be able to sell it. With an auction, you might be able to get a very good price indeed if the car you’re selling is desirable in some way (e.g. a sports car that you have to say goodbye to because you need a car that fits a family but the budget doesn’t run to two cars). The downside is that it can take a long time, meaning that you might have to wait until you have the cash on hand to use as a deposit to secure the loan for the new car.
Option number three is a cross between the two methods, where you get the sales yard to sell your old car on your behalf. Not all car yards are happy to do this, and even the ones that do will take a cut of the profits.