Trade-in Allowance

Category: finance

The dollar value offered by the dealership to buy the customer’s existing vehicle during a purchase transaction.

Dealers typically offer a "wholesale" or "auction" value for trade-ins, planning to either retail them on their own lot or flip them to a bulk auction network. Negotiating the trade-in allowance as a separate line item from the new car price is critical to avoiding margin dilution.

Common Examples

• We shopped our car trade-in allowance to three different dealers to ensure we maximized our cash equity for the new SUV purchase.
• The dealership offered a low trade-in allowance, but we offset it by negotiating a significant discount on the new vehicle’s MSRP.