How to Buy a Car Without a Trade-in

A trade-in greatly increases the ways a dealer can make money from selling you a car.
i Barry Austin Photography/Photodisc/Getty Images

Buying a car without trading one in greatly simplifies the process and reduces the headaches involved in negotiations. Going with the no-trade purchase approach opens up your options to find the best price on the car you want to buy. You can choose whether you want to negotiate with a dealer or go with a no-hassle pricing plan.

The Problem With Trade-ins

If you trade in a car when you buy another, you face the prospect of a complex negotiation with the dealer. You must be able to work out an acceptable price for the car you are buying and an acceptable offer for your old vehicle. If you get a firm purchase price for the new car from an alternate pricing service or over the Internet, a dealer will not give a value for your trade without first inspecting the vehicle you want to trade in. After evaluating your current car, the dealer may not offer the value you expect for your trade. Dealers are not required to follow used car pricing information put out by the online sites.

Using an Alternate Pricing Service

A straight, no trade-in purchase allows you to get the price for the car you want from an alternate pricing service. Car buying assistance and pricing are available from a number of sources, from your favorite bulk retail outlet to online car pricing companies to the dealer's own Internet sales system. With one of these services, you may be able to lock in the price, financing and payments before you ever go to the dealership. When you do go in, you just sign the papers, pick up the keys to your new car and go.

Shortening the Dealer Experience

If you prefer, going to the dealer to test-drive and then negotiate a price will also be easier without a trade-in. If you are buying a new car, the available online invoice pricing will be more accurate than the information provided for trade-in values. Negotiating with the dealer for the lowest possible purchase price is more straightforward. One approach is to make an offer close to the invoice cost minus any available rebates and hold your ground until the sales manager stops lowering the price on his counteroffers.

You May Need More Cash

A stumbling block for a no-trade purchase may be a requirement for you to put up a larger amount of cash as a down payment for the purchase. A trade-in can provide equity to fill the need for a down payment, allowing you to drive off in a new car without writing a big check. The amount you need to put down depends on your credit history, but you may need to be prepared to cover up to 20 percent of the cost of a new car out of your savings.

the nest