How does part-exchange work for cars?

If you want to sell your car and get behind the wheel of a newer model quickly, part-exchanging it could be a viable option. By part-exchanging your motor, you can benefit from a quick sale and subsidise some of the cost of your next car.

In this guide, we’ll explain how part-exchanging works. We’ll also cover the pros and cons of utilising this selling method. Finally, we’ll outline the process to follow when selling your car through a part-exchange scheme.

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What is part-exchange?

A part-exchange deal allows you to trade in your car at a dealership – and put its value towards the cost of another vehicle.

Although you are selling your car to a dealership, the proceeds of the sale won’t be sent to your bank account. Instead, you’ll be able to put this sum towards the cost of another vehicle at the same dealership.

Both you and the car dealer will have to agree on a trade-in value for your vehicle before entering into a part-exchange agreement. (The dealer will calculate the car’s value based on a variety of factors, such as its make, model, condition, mileage and trim level.)

Once you have part-exchanged your car, its trade-in value will be deducted from the price of your new vehicle, which you can then pay off in cash or through a car finance agreement.

Is part-exchange a good idea?

Although there are several benefits to part-exchanging your motor, you should also be mindful of the potential drawbacks:

What are the advantages?

Part-exchanging your car will spare you the hassle associated with selling your car privately, as there’s no need to advertise your car or liaise with potential buyers.

You won’t have to invest time or money promoting your motor on car advertising sites.

You’ll avoid the transitional phase where you simultaneously own your new and outgoing car. In short, you won’t need to keep and maintain two vehicles on or around your property.

With a part-exchange agreement, you can usually drive your new car home on the day you trade in your old one. Therefore, you won’t be left without a vehicle at any time.

What are the disadvantages?

You probably won’t be offered as much money for your current car as you could get on the private market.

When it comes to your next purchase, you will often be able to buy a car privately for less than what you’d pay at a dealership.

Dealerships are often more focused on making a profit than private buyers. They need to cover many more overhead costs, such as rent for their premises, staff wages - and repairing and reselling used cars. These costs are inevitably passed on to customers.

You’ll need to negotiate with the car dealer to leverage the best possible part-exchange deal (which will be daunting for some).

How does part-exchange work?

In a part-exchange agreement, the value of your current car is used to subsidise the cost of a new one. (The old vehicle is used in place of cash as part payment for a newer model.)

Once you have decided which car in the showroom you would like to buy, you can offer your current vehicle to the dealer for part-exchange. The dealer will subtract the value of your current car from the price of the model you intend to buy. This allows you to sell your old vehicle and secure a new one at a discounted price in one straightforward deal.

For example, imagine you want to buy a vehicle priced at £10,000. You offer to part-exchange your current car, which the dealership values at £3,000. If you agree to this deal, the dealership will take your current car away and you will only need to pay the remaining £7,000 for the vehicle you want.

What is the process for part-exchange?

Get a free car valuation to find out what your car is worth before you part-exchange your car. This will help you gauge whether you’re getting a good deal.
If you decide to go ahead with the part-exchange, prepare your car in the same way you would if you were selling the vehicle privately
Take your car to your chosen dealership. (Remember, different dealerships will offer different trade-in values, so you may want to shop around before settling for a part-exchange deal.)
The dealership will inspect your vehicle before giving you an official valuation based on factors such as its make, model, mileage, age and condition. This is the amount that you’ll be able to pay off on your new vehicle if you agree to the part-exchange.
At this point, you’ll have the opportunity to negotiate a better price for the vehicle. Some dealerships will be more open to negotiations than others. If you are unable to leverage a deal that you’re happy with, you can always walk away and take your vehicle elsewhere.
If you agree to the part-exchange, the dealer will take your vehicle off your hands, along with any relevant documents and keys. You’ll then be able to choose a new vehicle to buy with your old car’s trade-in value discounted from the price.
You can then agree on a payment plan for the remaining cost of the vehicle. You can cover the cost by utilising a car finance plan – or simply buying the car with cash.

How does exchange and completion work?

‘Exchange and completion’ refers to the exchange of a contract committing both you and the dealer to a part-exchange agreement. Once you have signed this document, you are locked into the terms of the part-exchange agreement until you have paid for your new vehicle in full.

(This agreement will include both the final agreed part-exchange value for your old car - and the payment plan for the new vehicle.)

What documents do you need to part-exchange your car?

When you take your car to a dealership to part-exchange it, you’ll need to bring the following documents with you:

Your V5C logbook.
The car’s manual(s) and service records.
Photo ID (driving licence or passport).
A recent bank statement or utility bill (less than 90 days old).

Missing key documents? Visit our guide ‘How to replace missing car documents’ for tips and guidance.

In addition to these documents, you’ll also need to bring both sets of keys and any extras, such as the locking wheel nut.

Do you need to pay a deposit?

You do not usually need to pay a deposit when purchasing a vehicle through part-exchange. (Your old vehicle will serve as the ‘deposit’ on your new car.)

However, if you are taking out a finance agreement to pay for a new vehicle - and your old motor’s trade-in value is less than the deposit for the new one, you may be asked to pay the difference.

Is it better to sell or part-exchange?

When it comes choosing how to sell your car, you should consider what works best for you. Part-exchanging typically involves less hassle than selling privately, but there are also potential pitfalls to watch out for.

What are the alternatives?

If you’re looking for a simple and convenient way to sell your car at a great price, you might also consider using a car buying service such as webuyanycar.

Simply enter your reg number into our free car valuation tool to find out how much you could get for your car in less than 30 seconds!

You can make an appointment at any of our 500+ UK branches at a convenient date and time. Our helpful buyers will be on hand to assist with the paperwork and set up your payment.

The entire selling process usually takes less than an hour. What’s more, if you choose our new Immediate Payment option, you can get the money in your bank in 15 minutes or less.

Unhappy with an existing part-exchange valuation? Our buyers could offer you a better deal, giving you more cash to put towards your next car.