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Part-Exchange: Car Finance Jargon Busters

Are you thinking of selling your car to buy a new one? 🚗 You may want to consider part-exchanging it to a car dealer instead of trying to sell it on your own. Most car dealers actually accept a part-exchange arrangement. If you’ve found a car dealer you like but you’re not sure if they’ll take your car, you can simply ask their representative. The money you’ll get out of your old car depends on the value that the dealer thinks it’s worth, so be sure to shop around to know the best deals.  

How Does Part-Exchange Work?

When you part-exchange your old car, the value of your vehicle will be used as part of your payment or deposit for a new car. The dealer will assess your car to know how much it’s worth and then basically buys the car from you. But instead of giving you cash for the car, the dealer will subtract the value of the old car from the price of the new car you want to buy. 

For example, the new car you’re looking to buy has a price tag of £20,000 and your old car is valued at £7,000. You may part-exchange your car with the car dealer and when everything’s been agreed upon, you only have to pay the remaining amount which is £13,000. 

It’s important to remember that just because the dealer assessed the value of your car, it doesn’t mean you can’t check other dealers. If you think the valuation is not what you have in mind, you can try haggling (they are usually willing to do some negotiating if they want to sell the new car to you) or shopping around for other deals. Also there are many sites where you can check out the correct valuation of your car. But bear in mind the final valuation will depend on it's condition, so could decrease once it's actually seen.

Checklist for Part-Exchange Valuation

Typically, car dealers consider a number of factors so they can evaluate and calculate how much your car is worth. Here’s a list of what dealers look at when assessing a car for a part exchange. 

  • Make and model
  • Service and maintenance history
  • Mechanical health of the vehicle
  • MOT history
  • Mileage
  • Colour
  • Any damage to any part of the car
  • Modifications and added features

The car dealer enters the information into a database which helps them in placing a value of your car based on its current market value. One of the ways that you can get the best price when part-exchanging your car, be sure to take all the documents relating to your car, especially the ones on its service and maintenance and MOTs

Before taking your old car to the dealership, it can also help if the car is cleaned thoroughly first, both inside and out. You’d want the car to look in its best shape. A dirty car will make a poor first impression and you can almost be sure that the valuation on it won’t be as high as a car that looks like it's well taken care of

What Happens to Your Old Car?

So, when you’ve driven your new car home, you might think “What happens to a part-exchanged car?” The fate of your old car depends on a number of factors, including where you part-exchanged it, its condition, and age. 

The dealer might sell it if they think there’s a demand for that specific model. For cars that have higher mileage, older or are in poor condition, they are auctioned off. It’s easier and more cost effective for car dealers to dispose of old cars through auctions than letting them sit on their forecourt, waiting for a buyer. 

It’s also possible that the dealer will scrap the old car and take salvageable parts. Cars in a terminal state can still be part-exchanged but often, the most you can get out of them would be £200. 

When to Part-Exchange My Car?

There are several advantages to part-exchanging your old car. The best one perhaps is convenience. If you choose to sell the car on your own, you’d have to put up ads and wait for the ideal buyer with the right amount of cash to make the purchase. This can simply take forever. By part-exchanging your car at a dealership, you just have to choose the new car you want to drive and then leave your old car with the car dealer. 

Of course, there are also some disadvantages to this arrangement. If you compare the money you’ll get from your old car, you’ll most likely get more out of it by selling the car yourself than by part-exchanging it. This is because car dealers have to give some allowance to their valuation so they can earn a profit when they sell the car.  But this is always a risk you take - as to whether you manage to sell it quickly or for the price you want. And be aware of the many scams out there if you sell privately.

Can I Part-Exchange a Car That’s on Finance?

Many drivers with financed cars wonder “Can you part ex a car on finance?” The answer to this really depends on the car dealer. Some dealers will consider taking in financed cars for a part exchange. There’s a caveat though, you should owe less to the car finance company than the value of the car. 

So, the next question you might be asking would be “When can you part-exchange a car on finance?” And that's when the car is worth more that you still owe the lender. So you will need to ask the lender for a settlement figure in advance.  The car dealer will then be the one to pay off the outstanding balance you have to the lender and then the difference will serve as a deposit or part deposit on the new car you’re buying. Here’s an example to illustrate this.If the old car’s value is £10,000 and you still owe the car finance company £7,000, then the dealer will pay that off. The difference, which is £3,000 will be deducted from the price of the new car you want.


Part-exchanging your old car for a new one is a good option to consider if you want to skip the long waiting game and the hassle of selling it on your own. It would be great to do some research on the car first so you’ll know if you’re getting a fair valuation from a car dealer. Don’t be afraid to say no to a deal if you feel it’s not good. And do feel free to shop around until you find a dealer that’s willing to offer a reasonable price for your car.  The figure you can negotiate will largely depend how keen they are to sell their car to you and their targets for the month! Best of luck! 👍

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