Are you considering upgrading to a new car, and wondering what is the best way to profit from your current vehicle? Part-exchanging at a dealership could be the most convenient route for you. This quick Ozoomi guide will walk you through the essentials of part-exchanging your car.

Understanding Part-Exchange

Part-exchanging is a process where your existing car can be used as a partial payment towards your new vehicle. It makes the transition from your old car to a newer one simpler, by offsetting (helping pay towards) the cost of the new purchase with the value of your old car. It can be much, much simpler than going through the hassle of organising a private sale.

The Part-Exchange Process

Here's how the part exchange process usually goes: 

1. The dealership assesses your car and offers a trade-in value. 
2. This amount is then deducted from the price of your new car, leaving you to pay the balance. 

For example, if you're looking at a car priced at £15,000 and your trade-in is worth £5,000, you'll only need to cover the £10,000 difference.

How is Your Car Valued for Part-Exchange?

Online tools can give you an initial estimate of your car's value, but the final offer from the dealership will, of course, take into account the ‘real-world condition’ of your car. Dealers consider the following when valuing your car:

• ‍Make and Model: This refers to the manufacturer's brand and the specific name of the car's design (let’s take an example of a BMW X5). The make and model can influence the car's value as some brands and models are more sought after due to their reliability, performance, or status symbol.
• ‍Service History: This is a detailed record of all the routine maintenance and repairs that the car has had. A well-documented service history can increase a car's value as it shows potential buyers that the car has been well cared for. 
• ‍Mechanical Condition: This covers the car's engine health, the performance of the transmission system (the link from the engine to the wheels!), the condition of the suspension, brakes, and exhaust systems, and any other mechanical components.
• ‍MOT History and Mileage: The MOT history indicates the car's roadworthiness over the years. Combined with the car's mileage, it gives an indication of how much the car has been used and how well it has been looked after.
• ‍Colour and Bodywork Condition: The colour of the car can affect its desirability, as certain colours are more popular and keep value better. Dents, scratches, and rust on the bodywork can significantly reduce a vehicle's resale value.
• ‍Modifications and Extra Features: This includes any changes made to the car from its original factory condition. This could be custom paint jobs or additions, which can either increase or decrease its value depending on the quality of the modifications and whether they would be appreciated by potential buyers.

Remember, a well-maintained car could fetch you a better part-exchange price, so it's wise to keep it clean and gather all relevant documents before it is assessed for its valuation.

Can I Trade in a Car on Finance?

Yes! But there are a few things to consider:

If the value of the car you want to part-exchange is more than its remaining loan amount, this means that it is in positive equity. In this case, dealers can settle the finance as part of the deal, with any excess going towards your next vehicle.

If the car that you would like to exchange is deemed to have a value less than the settlement amount you would have to pay the finance lender to settle your agreement, this is known as negative equity or a shortfall. If this happens you may have the opportunity to:

• Pay off the negative equity amount to settle the agreement with the lender
• See if you can add the negative equity to the finance agreement on the new loan.  

For more information, check out our article on negative equity.