Vehicle Trade-in

Trading in a vehicle versus selling privately has pros and cons. On the downside, dealers generally offer the wholesale value of a trade-in, which could be less than what an individual may get selling privately.

On the upside, trading in a vehicle is easier, faster and more secure; it avoids the potential headaches (for example, no-shows, ownership transfer, obtaining secure payment) associated with selling privately; and, there are tax savings to be had when trading in.

For example, a car buyer with a $10,000 trade-in, who is buying a $25,000 vehicle, will only pay HST on the $15,000 cash difference ($25,000 – $10,000) – a significant savings of $1,300.

Determining fair value

When determining the value of a trade-in, car buyers should understand it can be affected by numerous factors including the vehicle’s popularity, its condition, mileage, colour, even the time of year or location.

There are also resources and steps you can take that may help you determine what the value might be:

• Consult the Canadian Black Book. This free online service provides general information including wholesale value estimates.
• Get an appraisal from another dealer. Many offer this service for a small fee, they may even make an offer to purchase the vehicle directly.
• Make the dealer aware of recent repairs and improvements made to the vehicle (for example, new tires or brakes), this could increase the value of the vehicle because it will decrease the dealer’s re-conditioning costs.
• Know the current condition of your vehicle. Much needed repairs could bring down the value of the vehicle, whereas low kilometers will normally increase its worth.
• Understand trade-in value can be negotiated and may vary between dealers.

Money owing?

A car buyer who still owes money on a vehicle being traded-in should call their lender to obtain the loan payout (amount still owing). Many dealers will do this for their customers, but you should verify the payout.

OMVIC’s Code of Ethics, the Consumer Protection Act and the Sale of Goods Act require dealers to remove liens on trade-ins as soon as possible.

OMVIC urges car buyers to be mindful of early warning signs that indicate the loan on a trade-in was not paid in full. Should a payment be deducted from a individual’s bank account for a payment on a vehicle traded in, contact the dealer and the financial institution. If that doesn’t rectify the problem, the consumer should immediately contact OMVIC’s consumer support team.

If a dealer offers to make the monthly loan payments on a trade-in, rather than pay off the loan in full, you should understand this is a significant risk and contact OMVIC at once.

Trade-in history

Dealers are required by law to ask an individual trading in a vehicle to sign a trade-in disclosure document outlining important information about the previous use, history and condition of the trade (for example, previous accidents), as the dealer is legally required to give full disclosure to anyone they then sell the vehicle to.

Protect your identity

Technology in vehicles is designed with a driver and passenger’s convenience in mind. Many of these computerized features require vehicle owners to input personal information; information that should remain private. So, before trading in a vehicle make sure you do take the following steps:

• Delete garage door opening codes.
• Delete the vehicle’s stored phonebook/contacts (and any other information that has been paired with a cellphone).
• Delete saved addresses/searches from the navigation system.
• Remove documents from the glovebox/door pockets/etc. that might contain personal or private information.