Aaron Widmar
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What Does the Dealership Do With My Traded-In Car?

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trade in car to dealership
What happens after you hand over the keys to your old car?

You’ve finally picked out the new car you’ve wanted at the dealership. Now you’re signing the papers to trade in your current car for this newer vehicle you’ve been eyeing. Once you get that money for your trade-in and hand over the keys, you bid farewell to “Old Faithful” as it’s driven out of sight behind the building by one of the dealership employees.

For most of us, trading in our car — which we’ve even given a personal name — is a bittersweet experience. We desperately need a new car, and it’s helpful to get some extra trade-in credit, yet in our hearts we hope that our old car is treated well and finds its way to another loving home.

But what actually happens to your car once you hand it over to the dealer? Let’s pull back the curtain and see the fate of your beloved first car.

Learn More: What are the benefits of trading in your car to a dealership?

Discovering the fate of your traded-in car

According to Real Car Tips, what the dealership does with your trade-in depends a lot on its age and condition.

Dealerships actually make a decent amount of profit on trade-ins that are reconditioned and sold on their lot since they don’t have to pay an invoice cost to the OEM. Typically, the vehicle has to have under 75,000 miles and 5 years on its record to be profitable for resale, though some small “mom and pop” used lots might take it if it’s past that point.

If your trade-in fits these conditions and is a model that’s attractive enough to buyers (especially if it’s a brand the dealership carries), then your old car will get cleaned up and priced at 15-20% higher than its actual value to be sold to a new owner.

If the car you’re selling is a recent year without much wear, it might even qualify for Certified Pre-Owned status, which would make the dealer even more profit since it can sell it at near-new prices.

But if you’ve traded in that 10-year-old sedan you drove in college that makes unnatural noises, the sad truth is that it’s not getting sold. Cars that no one else will want to buy or that will cost dealers a lot of money to refurbish are typically sent to auction to make the dealer a few hundred dollars. Once the dealership pockets that cash, the car will be stripped for scrap parts.

If you’re only going to receive a few hundred dollars in trade-in credit for your old-but-functioning used car, you may want to consider selling it yourself privately. Or, give it to someone you know who could use it and doesn’t have the money to buy a used car from a dealership. Just keep in mind that most donations to charities also result in auctions for scrap value.