How to part-exchange a car

It's no good getting a great deal on your new car if you get a bad price for the old one. That's where our part-exchange guide can help

BuyaCar team
May 11, 2021

If you're considering purchasing a new car, you may be wondering what to do with the one you already have. You could put your car up for sale, going through a whole load of stress trying to find a buyer and organising the sale, or you could skip all of that rigmarole and part-exchange it instead.

Part-exchange is a slick way to kill two birds with one stone. You choose your next car and then cut the cost of the new one by trading in the old one at the same time. If you're paying cash, the value of your old car goes straight into the sale price of the new one, while if you're opting for a finance deal, your old car is generally put forward as part or all of the initial deposit. So you're handing over less cash, and you get rid of your old car in a single transaction. Simple.

If your old car is still worth a substantial amount of money, it can be a great way to reduce the size of your monthly finance payments, too. You could end up paying off a much larger deposit than you might have thought, meaning the amount left to pay of the course of the finance period could be far smaller.

Part-exchange is available:

  • If you own your car (this includes anyone at the end of a Hire Purchase (HP) finance deal. The full part-exchange price goes towards your next car)
  • If you are at the end of a Personal Contract Purchase (PCP) finance agreement and the part exchange value is more than the optional final payment (only the value left in the optional final payment goes towards your next car)

Many manufacturers also offer what are known as scrappage schemes, which give you the opportunity to exchange certain older models for up to £8,000 off a brand new model. Sometimes these options are worse value than the standard finance offer, as the interest rate could be higher or you may not be able to take advantage of other discounts, so it's worth getting like-for-like quotes to compare with alternative PCP deals to establish which is better for you.

If you aren't using a scrappage scheme, however, it can be difficult to work out whether you're getting a fair price for your car. Read on for our guide to getting a good part-exchange deal.

How much is my car worth for part-exchange?

The value of your car in a part-exchange agreement is based on industry data, drawn up by companies that monitor the value of second-hand cars. The car's mileage, service history and specification all have an impact on the amount that it's worth.

You can use BuyaCar's car valuation tool as a guide to a reasonably accurate value but the final figure will depend on the car's condition, with large scratches, dents and torn upholstery all reducing the value. Once you have an initial quote, you will be contacted for more details needed to generate a confirmed valuation.

Opt for the BuyaCar part-exchange option and the old car will be picked up once your new one is delivered, so there's no need to travel anywhere or do without a car until the new one arrives. At that point it will be inspected to ensure that it is as described. If it is in a better or worse state, this can affect its value.

If you're comparing part-exchange valuations with different online car buying services, ensure that you are using confirmed prices, based on the condition of your car: the amount that you are paid can sometimes be much lower than the initial online quote if you don't describe the car accurately. Some services require you to take your car for an inspection.

Part-exchange a car on finance

PCP finance gives you the choice of either returning your car at the end of the agreement with nothing more to pay (provided you've kept it in good condition and stuck to the pre-agreed mileage limit), or buying it for a one-off price (known as the optional final payment).

There's also a third option of 'part-exchanging' the vehicle and getting a different car on a new finance deal, which can be worthwhile if you've looked after your previous car and it's worth more than the optional final payment - the remaining debt on the vehicle.

Many companies set up PCP deals so that the car should be worth more than the optional final payment once the initial monthly finance period is over - though this is never guaranteed. If you do get to the end of your finance deal and your car is worth more than that final payment, then you can put that additional value towards the deposit of a new car - this is known as having 'equity'.

If you decide take out a new finance contract and part-exchange the car, the company taking your old car in part-exchange can settle the remaining finance balance on that car by paying the optional final payment. You can then put the difference towards the deposit on the new finance contract.

It's also possible to part-exchange your car if you're in the middle of a finance agreement and you owe more than the car is worth. You, or the new company you're part-exchanging the car with, can pay a lump sum to settle the deal - known as the settlement fee - and roll the additional debt into a new negative equity finance agreement, so you pay off your old car and your new one at the same time.

It's important to ensure that this is the right option for you, because you will likely see your monthly payments increase as you'll essentially be paying for two cars. You'll also pay more interest by doing this than sticking with the original finance contract. There are other ways of ending your finance agreement early, so this is rarely going to be your best option.

Sell or part-exchange?

In general, you can get more money for your car by selling it yourself rather than part-exchanging it. This could be a worthwhile option if you have the spare time, and are happy to deal with enquiries and visits from interested potential buyers. Alternatively, you might look for the best price from various car dealers.

The cost of avoiding this hassle by trading-in the car can be seen as the difference in the part-exchange value and the price of selling your car privately if you have a good idea of what you can sell it for yourself.

Focus on the cost to change

Whatever price you're offered for your part-exchange, what really matters is the cost to you of changing your car. If a new car costs £10,000 and you're offered £3,000 for your current car, then the cost to change is £7,000 - the difference between the value of your part-exchange and your new car.

Another seller may only offer you £2,500 for your car. That may seem like a bad deal, but if they'll sell you the car that you want for £9,000, then you're going to end up paying less because the cost to change is only £6,500.

 

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