Research

• Before trading in a vehicle, do some research and get a good idea of what it's worth on the open market. Consider not only the blue book value of the car, but what it goes for in your area, as the prices of different vehicles can vary greatly depending on demand. The classifieds often provide a clue as to the going rate for a vehicle. Deduct from this price any defects in your vehicle.
  
  

Shop Around

• You almost certainly won't receive a fair market value for your trade-in vehicle. According to the website Real Car Tips, dealers will generally offer 25 percent less tan the blue book value for your trade-in vehicle. However, the offers made by individual dealers will vary according to their estimation of the car's value and their own policies. Before agreeing to trade in the vehicle, go around to a number of dealers and ask what they'll give you for it.
  
  

Negotiate The Price of the Trade-In First

• Often, dealers will attempt to negotiate the price of the new car purchase first and then negotiate the price of the trade-in. However, to make sure that you're not stuck selling your old car at a rock-bottom price, conclude a preliminary agreement on the price of the trade-in first. This will save you the hassle of having to scrap the more complex new-car negotiations if the dealer has little interest in your older vehicle.
  
  

Take A Tax Discount

• Most states allow individuals who are trading in a vehicle when buying a new car to pay sales tax only on the price of the new vehicle minus the money received for the trade-in. So if the new vehicle cost $20,000 and you received $5,000 for the trade-in, you would only have to pay sales tax for a $15,000 purchase. According to the financial reference website BankRate, this is the law in all but eight states.