This could be the best time ever to sell or trade in your used car.
Used cars are selling for record high prices, and that’s clearly good news for those looking to sell.
Here are 5 ways to ensure you’re getting top dollar for your sale.
1. Don’t hold out
Although some lucky folks are actually selling cars for more than they paid for them a year ago, that is still very much the exception rather than the rule, said Brian Moody, executive editor for Autotrader.
“I wouldn’t count on that,” he said.
And don’t expect a huge windfall from an older model.
That 2004 Ford Escape in your driveway is not going to get you top dollar, even if it’s worth a bit more than it might have been a year ago. The real gain in prices has been for newer models.
Edmunds shows retail prices for cars that are five years old or less are up about $6,000 to $24,000 or more on average, depending on the age. The retail price for a 9-year old car is up $3,000 to $13,250.
And if you’re trying to get the very top price for your car, it’s possible you missed it by a little bit.
Although the Manheim Used Vehicle Value Index for June shows wholesale prices up 34.3% from a year ago, that number has fallen 1.3% from the record set in May. But current prices remain very strong — and retail prices are still climbing.
2. Have a plan to replace your car
Make sure you have found a replacement vehicle at a price you can afford, or have decided that you don’t need a replacement.
Just as some home sellers are having difficulty finding a new home, it’s a good idea to know what you’ll be driving after you get rid of the car you have now. Both new and used cars are in tight supply, which is a major factor in why prices for both have hit record levels.
3. Sell the car yourself
One way to maximize the price is to sell the car yourself. That way you can get the retail price rather than the trade-in value, which generally mirrors wholesale pricing.
“Usually, the best possible price comes if you sell it yourself,” said Moody. “But that takes time and effort.”
It can also make you somewhat more at risk for scams. A car dealer — no matter what you think of your experience with them — is a legitimate business that is not going to hit you with a bad check or some other trick.
4. Shop around before you sell
If you are going to sell to a dealership, either through a trade-in, the return of a leased vehicle or a straight sale, do what you would for a car purchase — shop around.
Dealers are desperate to build their used car inventories right now. Some are even advertising to buy cars rather than just sell them. Given the scramble, there will likely be differences in what the same car will fetch from different dealerships. Some dealers might be more willing than others to overlook a scratch or a dent or a stain from a grape juice box on the backseat.
“Given that there is demand for slightly used cars, I would try a couple of dealers,” Moody said.
5. Flip your lease
When it comes to turning in a leased vehicle, this is probably not the best time to do that.
Almost all leased vehicles have a fixed price in the contract for which they can be purchased at the end of the lease. That price was set when the lease began, based on expected value. But the rapid increase in used car values means that price is very likely well below the current market rate. With that in mind it probably makes more sense to buy the vehicle at the end of the lease, then sell it yourself for a profit.
Moody cautions that some states don’t allow individuals to buy cars with the intention of immediately selling them unless they have a dealer’s license. But those laws are generally written to crackdown on sellers doing it on a large scale. It’s less of a problem for individuals buying and then selling a single car.
But be sure to check with the dealer you’re looking to sell the car to before you agree to purchase it at the end of the lease to make sure that there will be no problem “flipping” the car right after you get the title.