What's the best mileage to trade in a car?

There's no single answer to this question because mileage can be affected by other factors. For example, city driving is tougher on cars than highway driving. Also, thorough and consistent maintenance is better for a car — having maintenance records can help with a valuation. To determine when is the best time to trade in your car from a mileage standpoint, there are some milestones to consider.

Before factory warranties expire

Most car makers have new vehicle warranties for three years or 36,000 miles and powertrain warranties for five years or 60,000 miles (whichever comes first). Trading in before a warranty expires generally nets a higher trade-in value.

Before major service intervals

There's little financial sense in paying hundreds of dollars for a major routine maintenance service, only to trade in the car. If you've been consistent with its regular maintenance up to that point, trading it in before your next milestone may serve you better.

Before 100,000 miles

This is primarily a psychological milestone since there's no functional difference between a car with 99,000 miles versus one with 100,000 miles. But dealers need to profit from reselling your car after you trade it in, and a car with more than 100,000 miles may not sell for as much as one with less than 100,000 miles, either to a new buyer or at auction.

Should I trade in my car after two years?

The car's age matters for trade-in value. However, mileage and maintenance records can lead to different valuations for vehicles of the same age. The one age-specific consideration is the car's depreciation — how much a car's value decreases over time. The steepest decline happens in the first two to three years. If you have a car loan, you won't be able to get enough for your trade-in during those first three years to pay off your loan. Learn more about trading in a car with a loan.

There may be a "sweet spot" for trade-ins between the third and fourth year for value. After that, the depreciation rate per year tends to flatten out until about year eight. After that, selling it to a private party may be your best option.

Is there a better time of year to trade in my car for a new one?

Yes. Dealerships typically need more used car inventory in the first half of the year. Since dealerships also have sales goals to meet at the end of the month and the quarter, March tends to be a great time for getting a strong trade-in offer. There's an argument for good trade-in value at the start of a new model year since dealers will be eager to make deals to get cars off their lots. But when the new model comes out, your used car will be seen as another year older, which lowers its resale value. So trading it in well before a new model year debuts can increase the trade-in value.

The best time of year to trade in a car can also depend on the type of car. For example, if you have a sportier car or a convertible, you may get more value from trading it in during the spring months. Demand for those cars will steadily increase toward summer at the dealership. Similarly, trading in a 4x4 or SUV with all-wheel drive in the fall is a good idea in places where the winter weather gets snowy or icy.

Should I trade in my car before I pay it off?

Generally speaking, you should only trade-in your car when the dealer pays you more for it than the amount left to pay on your loan. When your vehicle is worth more than you owe, you have positive equity. If you have negative equity, you'll still owe money on the loan even after you trade in the car. However, the best time to trade in a car you still owe on isn't only affected by equity.

If you will have to pay a prepayment penalty for paying off your car loan, it might be worthwhile to wait until you're past the prepayment penalty period. In some cases, the best time economically to trade in your car is when it helps protect your credit rating. If you're having trouble making your car payments, it can be good to trade in a car, even with negative equity. Reducing the amount you owe, or lowering your payments with a different car and loan, can protect your credit from years of damage due to a default on your record.

Additional trade-in tips

As with car buying, shop around. You may be able to get a better price when multiple dealers are trying to win your business. If possible, it's also a good idea to approach a trade-in situation when you don't need to trade in the car. That way, you can feel comfortable walking away from a deal that isn't to your liking.

Keep in mind that when you trade a car in, you're likely to get less for it than its estimated value. The dealership needs to make a profit when it resells the car while paying for any reconditioning and repairs to enhance its value. You're likely to get more when selling your vehicle privately. But by trading it in, you'll be saving yourself the time and effort of finding a buyer and dealing with all the paperwork associated with a private party sale. Learn more about how to trade in your car and tips for trading in your car.