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  • Nicholas Hinrichsen

Carvana Trade-In: When should I trade-in my vehicle?

Updated: 6 days ago

Our last article covered what the trade-in process is like and how to get a trade-in offer with Carvana. Now we will be covering when you should trade-in your vehicle. For some people, depending on where you live, trading your vehicle can be a great way to save money on your next car purchase because some states offer tax credits. If you want to get an idea of your vehicle's valuation, check out our vehicle valuation tool here. In this article, we will be going over the following:


Carvana’s Trade-In Process


Trade my car to Carvana


Let’s quickly recap our last article on Carvana’s trade-in process. Once you have received your real online appraisal from Carvana, you can have the vehicle picked up or drop it off as early as the next day. Both processes are at the customer’s convenience and on their terms.

If you are opting for vehicle pick up:

  1. Tell Carvana when and where to pick the vehicle up

  2. Your Carvana associate will complete a vehicle test drive and brief inspection before signing any paperwork

  3. Due to safety concerns about coronavirus, Carvana will bring all paperwork to you, and this will be a touchless transaction

  4. Carvana will finalize your trade-in and pay you on the spot

  5. The new vehicle that you picked out online at Carvana.com will be brought to the transaction location, and a Carvana associate will drive your old car away

If you are dropping your used car off at a Carvana Vending Machine or hub:

  1. You choose the nearest location to drive to

  2. Due to safety concerns about coronavirus, you will sign all paperwork through a touchless transaction

  3. Carvana will finalize your trade-in and pay you on the spot

  4. Your newly purchased used vehicle that you picked out will descend the Vending Machine and will be prepared for you to drive home

All Carvana vehicles pass a 150-point inspection and have clean titles. Your new vehicle will come with a 100-day automotive warranty and 7-day money-back guarantee return policy to make sure it is the right fit. Once you trade-in your car, Carvana will subtract the value from the price of the vehicle you are purchasing.


When should you trade-in your vehicle?


Usually, trading in your vehicle is less of a hassle than selling it to a private party or other car dealerships and then going to buy a new car. When you trade-in with Carvana, as mentioned previously, they will handle all the paperwork, transferring title, and registration, making the car buying process less of a haggle.


A general rule of thumb is that when you have positive equity, it is good to trade-in your vehicle. For example, if you owe $5,000 on your car, and it’s trade-in value is $10,000, you now have $5,000 of equity that can be used towards the purchase of your new vehicle. You can use the positive equity to pay off your old loan, and you can use the rest to reduce your new loan balance.


If you have negative equity, this means that your car is worth less than what you owe. For example, if you owe $10,000 and your vehicle’s trade-in value is $7,000, then you will still have to pay off the $3,000 difference on your current loan. When you are in this situation, it is better to hold off trading in your vehicle until you can pay down your loan until it is paid off or you have positive equity on your vehicle. Something to beware of is that some dealers might offer to rollover your negative equity to your new loan. This is not a smart move because it will create a larger loan that you will pay more interest on overtime.


When it comes to timing your trade-in, some things to consider are your vehicle's age and mileage. New cars decline in value most rapidly in the first three years, so you should avoid trading within that period, especially if you have negative equity on your vehicle. Once you reach five to seven years is when the value of your vehicle will start to settle. For mileage, as your vehicle's odometer 100,000 miles, depending on the car's upkeep, it may become less appealing for dealers to buy. Generally, it would be best if you tried to keep your car for over five years, as long as your mileage does not skyrocket, before you consider trading it in.


Where can you get a trade-in tax credit?


One of the most significant benefits of trading your vehicle is that you can receive a tax credit towards the purchase of your new vehicle. Out of the 50 states in the U.S., California, Hawaii, Maryland, Kentucky, Michigan, Virginia, and D.C. do not have a trade-in sales tax credit policy. This means that you will pay the full sales tax on the purchase of a new vehicle.


For states that do have a trade-in sales tax credit means that when you trade-in your vehicle, your trade-in value is subtracted from the new vehicle's price, and you pay sales tax on that figure. For example, if you trade-in your vehicle for $5,000 and your new vehicle costs $20,000, then you will pay sales tax on $15,000. Each state has different tax rates, so make sure you check what it is in your respective state, but regardless, this can be a great way to save money when you trade-in your vehicle.


Know your vehicle’s value


We have created a list of tips to consider when trading in your vehicle to make sure you get the highest offer:

  • Search "sell to Carvana Reddit" on Google to read up on other customers that traded in similar vehicles to yours

  • Research your vehicle's Kelly Blue Book (KBB) value

Use WithClutch's Vehicle Valuation Tool to find out how much your car is worth

  • Our tool offers free vehicle valuations for your vehicle details from data compiled from offers given by Carmax, Carvana, Shift and Vroom to make sure you get the best offer possible

  • If you look at the data on the first chart below, you will see for most used vehicles (~10-20k), Carvana tends to have the strongest online car offers

  • On the second chart, you will see that Carvana offers ranks as the highest bidder for offers 35% of the time.



Are you trading your car because you are struggling with loan payments?


Refinance with WithClutch!


Are you interested in getting the best trade-in deal your car can get with Carvana or Carmax? You can also save big on refinancing your car loan.


WithClutch.com is a fully digital platform that lets new car owners like you lower their car payments from the comfort of their own home. No need to set foot in a bank or credit union. You can reduce your rate or get cash in as little as 20 seconds.


Follow three simple steps to refinance your auto loan, get approved in seconds, and save thousands in minutes.


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