The first thing that you need to remember about trading a vehicle in is that the sentimental value of the vehicle to you does not pass over to physical value in the vehicle. What I mean by this is, even though you think the vehicle is great and it has been good to you does not mean that it is valued as highly by the market.
A good example of this would be my parents van. The van is known as "Big Red" and has been with my family since 2000 and been all over the country. Even though my parents would like to get a few thousand for it, the market says that it is only worth a few hundred. That is just the reality of the situation.
The best way for you to avoid unrealistic expectations when it comes to your trade is to get an estimate appraisal from Kelly Blue Book. Now this "appraisal" will not be 100% accurate as it is just going off basic information without driving your car or even looking at it; but it will give you an idea before coming into the dealership so you can be better prepared.
When you bring the vehicle in for an appraisal at the dealership my manager will look at the "Good" value of your vehicle as a trade in on KBB. He will then factor in anything that needs to be fixed up on the car. This will give us the accurate value for the trade.
Selling VS Trade
One question that I am often asked is "Why should I trade it when I can get more buy selling it?"
It is true that you can get more money from selling your car as compared to trading it in to a dealership. But the only people this benefits is the people who have the time to wait.
Here's what I mean; let's say you advertise your car online and 100 people email you about the car. Out of those 100 people only 50 will reply to your follow up. Out of the 50 only 25 will set up a time to look at the car. Out of the 25 only 12 will show up to see the car. Out of the 12 only 6 will reply to your follow up. Out of the 6 only 3 will give an offer and out of those 3 you might actually sell the car.
This is what us sales people have to deal with on a daily basis. By trading it in you eliminate the hassle of waiting for that person to come along who will agree to your price. Yes the price is lower then selling it yourself. But that is because as a dealership we are required by the state to do inspections on a vehicle before we are allowed to sell it. If you take into account the cost of inspections as well as minor repairs the cost generally comes out the same.
So the question you have to ask yourself is, do you have the time to spend meeting up with strangers who are going to try and talk you down in price; or do you save the time for other activities.
Here is an article from NADA that explains the reason for the price difference in more detail.