Is it ever a good idea to trade-in a car? First you should understand what dealers do with trade-ins. Most people think the dealer simply resells the car on the lot, but you’ll rarely see an old car sitting on their lot. While sometimes dealers do this when they get a pristine model at a great price, more often than not, they put the car up on the auction block.
That said, dealers still don’t make a killing on trade-ins, and there is some risk involved with taking someone else’s car. This means that whatever price you are getting is lower than what a dealer can get at auction.
So back to the original question, when should you trade-in a car? The best answer is when the car is unsellable. This means there are obvious problems wrong with the car, such that the work performed on the car would cost more than the difference in the trade-in and private party value.