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
Nov 23, 2020

If you're considering purchasing a new car, you may be wondering what to do with the one you already have. You could put the car up for sale, going through a whole load of stress to make sure it has an up-to-date MOT and giving it a thorough valet, or you could skip all of that rigmarole and part-exchange it.

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. You get your new car for less than it would have been and you get rid of your old one in a single transaction. Simple.

The added bonus of part-exchanging is that you end up having to hand over less cash for the new one. And if you're financing the new car, the value from your old car could cover the whole deposit - potentially meaning no other upfront payments to make and the benefit of lower monthly payments compared with putting down no deposit.

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 amount over 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 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 PCP 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 a little more than the optional final payment - though this is never guaranteed. If your car is worth more than this figure, however, then you can put the additional value over this remaining finance balance towards the deposit of a new car - this is known as having 'equity'.

If you then take out a new finance contract and part-exchange the car, the company taking the car in part-exchange can settle the original finance balance by paying the optional final payment to the finance company and buying it. 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 can either pay a lump sum to settle the deal - known as the settlement fee - or the dealer can pay the settlement fee to buy the car, 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, and that the new repayments are affordable, as you'll pay more interest by doing this than sticking with the original finance contract, and there are other ways of ending your finance agreement early.

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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