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.

When it comes time to buy a new vehicle, you might have the option to offset at least some of the cost by trading in your old one. But what actually happens to your well-loved minivan or truck when you trade it in? According to Gregg Fidan, founder of RealCarTips.com, traded-in cars generally go one of three places:

1. Recondition and resale

A car that’s being traded in after a few small dings—or after the owner gets sick of it and simply wants a newer model—is easy enough for the dealership to fix up, inject some of that new car smell, and resell it to someone looking for a decent car at a slight discount. (If you’re shopping for one of these trade-ins, make sure you brush up on these tips for buying a used car.)

2. Wholesale

Say you’re trading in your trusty old truck for a smaller sedan that’s got better gas mileage. You decide to visit a dealership known for its cars, which means not a lot of people are walking in looking for used trucks. Instead of taking a loss and letting it sit around on their lot for years, depreciating in value and sticking out like a sore thumb in 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.

3. Public auction

The third possible fate for a trade-in is 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. He warns that 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. Dealerships and even the general public can take advantage of the dirt cheap cars at public auction, but Lang generally recommends against it unless you’re a seasoned mechanic.

Now that you know what happens to trade-in cars, discover the fate of all of the cars that don’t get sold.

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Originally Published on Reader's Digest