Today, most financiers will want to see some sort of desposit or funds to your name when you apply for finance to buy a new car. We realise this isn't always easy, however, a large number car buyers do have one readily available source of funds to accumulate a deposit - that is, their existing car.
Trading in your old vehicle
Trade ins are effectively one way to conduct part-payment for a new car, with a large range of dealerships happy to oblige.
On the plus side, you can execute a 'sale' quickly with little pain and effort. The process is rather simple as well. You just need to let the dealership inspect your vehicle and they'll appraise it for you. Never mind about some tyre kicker who wastes your time keeping you waiting on a call back.
Of course, however, the downside is that you are less likely to receive the 'full' value that you might otherwise achieve out in the open market. Dealerships will typically discount a car's value by a set amount that covers their profit margins, including the prospect of potential repair work and more.
It's wise not to fall into the trap of thinking that this price is meant to be a reflection of the car's actual 'worth'. Nonetheless, don't let that stop you trying to haggle a better trade-in value for the car.
If the idea of a trade-in doesn't sit well with you, you can try your luck selling the car in the private market. Either take out an ad online, be it Gumtree, Carsales or the like, or put it up for sale on the side of the road with a sign on the window.
Most of the time you should be able to get a better price for the vehicle than if you were to trade it in, albeit this is never a certainty. But at the same time, you are able to decide the terms for the sale and ultimately have more scope to wait for other potential buyers to come along.
As you might predict, however, private sales might drag on longer than anticipated. There is a reason that some buyers end up forced into slashing their sale price, which is because they become desperate to get rid of the car after so long. If you are hoping to use these funds to buy a new car you might just be shooting yourself in the foot when it comes to moving quickly.
Even if you are in a tight spot when it comes to saving money, as long as you have an existing car, you may well just have access to a deposit that could set you on the right track towards being able to borrow for a new car.