Step 3: Negotiate or Close the Deal
Once you have appraisals, you have a couple of options. You can either take one of the offers you have, or negotiate (not an option for CarMax) for a better price. If the CarMax offer is the highest, sell it there. If you have your paperwork in order, you could be done in 30-40 minutes. If you are upside down on the car and need to fold the loan balance into your next car's financing, however, the dealership is the best place to do so.
If you're deciding between two dealerships with similar offers, you may want to lean toward the one at which you intend to buy your car. This gives you some leverage, since you're giving the dealership business on both the trade-in and the car purchase.
The first trade-in offer at a dealership is often on the low end, so there's room to negotiate. Say something like this: "I intend on buying a car from you today, so if you can improve on the trade-in price, I'd love to give you my business."
Another strategy is to use Edmunds TMV as a guide. Say something like this: "I've done some research on this car and it looks like the Edmunds trade-in value is slightly higher than your offer. I realize it's an average, but can you beat this price?"
Sometimes this will work, sometimes it won't. But if you've solicited more than one offer, you should have some options. If you keep getting the same offers for your trade-in and none of them seem to be what you had in mind, you may have to temper your expectations. This may very well be the market value of the car, no matter what you think it should be worth.
At this point, you can either bite the bullet and take what you're being offered, or try to sell the car yourself. Some people may even choose to keep the car as a daily driver, rather than pile the miles on the new car.
You may be able to make timing work to your advantage. Target the end of the month, when the dealer may be more willing to give you an attractive offer, or look for special promotions, such as when the dealership may offer extra cash as part of a trade-in event that's meant to beef up the used-car inventory.
Keep negotiations for the new car and your trade-in separate. The trade-in amount should be written in the contract as a credit against the purchase price of the car. In some states, you only pay sales tax on the difference between the new car and the trade-in. This means that on top of what you receive for your trade-in, you are paying less sales tax on your new car. This tax advantage is a net savings for you and could make you decide that trading in is worth it.