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
Oct 27, 2021

Getting a new car is an exciting time, but it can also be confusing. What do you do with your old car? You could put it up for sale and deal with the stress of trying to find a buyer at the right price, or you could part-exchange.

This is the slickest way to get into a new car, and because you can usually part-exchange your old car at the same place that you're getting your new car from, you can kill two birds with one stone.

If you're paying cash, the value of your old car will go towards your new car, reducing the amount you have to pay. You won't be left out if you're applying for finance, though: it will cover some or all of the deposit, and can even help to reduce monthly payments. The dealership deals with all the hard work, which means you sell your old car and buy your new car all in the same, simple transaction.

Part-exchange is available:

Many manufacturers also offer scrappage schemes, which give you the opportunity to exchange certain older models that are classed as high polluters against a brand new car. 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 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 to 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 by 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 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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