What Happens to Your Car When You Trade It In

When you trade in your old car for a brand new model, one of three things can happen.

business man gives the car keyfatir29/Shutterstock

By the time you invest in your second or third car, chances are you’ve been around the block enough to know that when it comes time to buy a new vehicle, one of your options is to trade in your old one. But what actually happens to your well-loved minivan that you can’t quite get the smell of french fries out of?

According to Gregg Fidan, founder of RealCarTips.com, traded in cars generally go one of three places.

Recondition and resale

Unless you’re trading in a car that is in nearly perfect condition, with low enough mileage, and a close to recent manufacturing date—in which case, why are you trading it in again?—this is not the road that car is going down. A car that is being traded in after a few small dings, or after the owner gets sick of it and wants something a few years newer, is easy enough for the dealership to fix up, put in some of that new car smell, and resell it to someone looking for a nice car at a slight discount. If you’re looking to buy one of these reconditioned cars, take note of the 12 best used cars to buy according to the experts.

Wholesale

Say you’re trading in your old trusty truck for a smaller, more environmentally and pocketbook friendly sedan. The dealership you would choose to go to is probably pretty well known for its smaller, more environmentally and pocketbook friendly sedans, which means not a lot of people are walking in looking for a used truck. So instead of taking a loss and letting it sit around in their lot for years, depreciating in value and standing out from their pristine line up, the dealership will drive it down the road to the lot with all the other trucks, and sell it to them wholesale, or trade for the nice used sedan someone just traded in for a truck. According to experts at The Drive, most cars that are traded in will end up here. The fact that your salesman got the car from another dealership’s trade-ins may not be a secret, but he certainly won’t want you to know these 34 car buying tips.

Public auction

The third direction for a trade-in to head is to a public auction. “Most of the cars at a public auction are the worst trade-ins or very rough repos,” Steven Lang, owner of a used car dealership told Popular Mechanics. Cars at public auction can be in extremely rough shape. “I’ve personally seen cars with over 300,000 miles on their clocks rolled back to 120,000 and sold as ‘Miles Exempt’ meaning no guarantee of mileage,” Lang said. This is the destination of cars that look like they are a few miles away from spontaneously catching fire. Dealerships and even the general public can take advantage of the dirt cheap cars here, but Lang generally recommends against it unless you are a seasoned mechanic. For the most part, these cars sell for less than a thousand dollars but if you’re really looking for a steal on a nice car, find out what happens to all of the new cars at dealerships that never get sold.

Isabel Roy
Isabel Roy has been a writer and editor for RD.com since February of 2019. She graduated from the University of Wisconsin La Crosse with a Bachelor of Arts degree in Writing and Rhetoric. She is thrilled to be living and working in the Big Apple although she misses the easy access to freshly made Wisconsin cheese curds and Kopps Custard. When not at the Reader’s Digest office, you can find her downing too many chai lattes and rereading her favorite Harry Potter books.