Car Finance with Part-Exchange: How It Works

Why This Guide Matters

Let’s face it: buying a car is about as fun as negotiating with a toddler hopped up on jelly babies. But when you throw part-exchange into the mix, suddenly things get interesting. It’s the magic trick that lets you wave goodbye to your old motor and say hello to something shinier—without needing to empty your piggy bank or sell a kidney. But beware: dealers are as slippery as an eel in an oil spill when it comes to this stuff. That’s why this guide is here—to help you dodge the potholes, avoid the classic pitfalls, and get the most out of your wheels when you’re eyeing up that new set of alloys.

The Basics Explained

First things first: what exactly is part-exchange when it comes to car finance? Simply put, you trade in your current car and use its value as a down payment—or deposit—towards the car you want to buy.

Here’s how it tends to go:

1. You bring your car into a dealership (or arrange an online valuation). 2. They poke, prod, and generally make you feel like your car is one MOT away from the scrapyard. 3. The dealer offers you a trade-in price, which you can use against your next car purchase. 4. The value of your old car gets knocked off the price of your new one, reducing how much you need to borrow (and hopefully, your monthly payments).

It’s not rocket science, but it does beat the hassle of selling privately and haggling with tyre-kickers who ask if you’ll throw in the fuzzy dice for free.

How It Affects You

Part-exchange can feel like a shortcut to automotive bliss, but let’s not get carried away. The value you’re offered for your old banger isn’t always generous. Dealerships have a nasty habit of ‘conveniently’ forgetting your car’s best features while highlighting every scratch like it’s a Banksy original.

This affects your finance deal in a few ways:

• Lower Deposit Needed: Your trade-in value acts as your deposit, reducing the amount you need to borrow. That means smaller monthly payments—or maybe even stretching your budget to a nicer model.
• Quicker Process: No faffing about with classified ads or strangers turning up to test drive your pride and joy. Hand over the keys, sign the papers, job done.
• Potentially Lower Total Cost: With a higher deposit, you might get better finance rates. Dealers love a big deposit almost as much as they love a cup of vending machine tea.

But—and it’s a big but—take the dealer’s offer at face value and you could be short-changing yourself. Always check what your car could fetch elsewhere. A little legwork can save you a small fortune.

Our Approach

At Kandoo, we think part-exchange should be as painless as possible. We’re not about the smoke and mirrors. Our approach is:
• Transparent Valuation: We use up-to-date market data, not a random number picked out of a hat.
• Independent Finance Comparison: Unlike some dealers who only push their own finance deals, we compare a range of lenders. If your part-exchange gives you a bigger deposit, we’ll help you find the lender who offers the best terms for your situation.
• No Pressure: We’re not on commission to flog you a particular car. Our only interest is getting you the finance deal that makes sense for you, not the one that lines a salesman’s pockets.
• Guidance Through the Process: We help you crunch the numbers, understand the paperwork, and avoid the classic mistakes (like forgetting to take your favourite air freshener out of your old car—seriously, it happens).

Here’s how a typical Kandoo part-exchange deal might look:

Your Old Car Value	Price of New Car	Deposit Needed	Amount to Finance
£3,000	£12,000	£3,000	£9,000

Simple, right? That’s the point—it should be.

Before You Decide

Before you go skipping into the dealership with your keys jangling, take a moment to consider:
• Market Value: Get quotes from multiple sources (dealers, online buyers, private sales) so you know your car’s real worth.
• Finance Terms: Read the small print. Some dealers offer a glossy headline rate, but the devil’s in the details.
• Car Condition: Clean it, fix those cheap niggles, and make it as presentable as possible. A smart-looking car fetches more.
• Negative Equity: If you owe more on your current finance than the car’s worth, you’ll need to stump up the difference. No hiding from the maths here.

A bit of preparation could mean the difference between a cracking deal and getting mugged off.

What’s Real, What’s Hype

Let’s bust a few myths:
• Myth: Dealers always give rubbish part-exchange prices.
• Reality: Some do, but others are fair—especially if you’ve done your homework and are willing to walk away.
• Myth: You must use part-exchange with dealer finance.
• Reality: You can use your car’s value as a deposit with any finance product—PCP, HP, whatever floats your boat.
• Myth: It’s always easier than selling privately.
• Reality: It’s easier, yes, but not always better for your wallet. Sometimes private sale is worth the hassle.

Pros & Cons

Let’s weigh it up like a set of rusty brake discs:

Pros:

• Saves time and hassle
• Can reduce monthly payments
• Quick and convenient
• No strangers turning up at your door

Cons:

• Risk of lower valuation than private sale
• Some dealers use low offers to boost their margins
• May limit your ability to negotiate on car price (dealers combine the two)

Other Options to Consider

If part-exchange isn’t floating your boat, what else is out there?
• Sell Privately: Usually nets you more cash, but expect to field calls from chancers and dreamers.
• Online Car Buyers: Think WeBuyAnyCar, Motorway, or Cazoo. Quick, but they’ll knock off a few quid for every scratch.
• Sell to a Specialist: Some dealers specialise in certain brands and might pay more if your car’s in demand.
• Use as Deposit on Personal Loan: Sell the car for cash, then use that as a deposit with one of Kandoo’s lenders—could open up better finance deals.

Sometimes, a little extra effort really does mean extra money in your pocket.

FAQs

Do I have to part-exchange at the same dealership? Nope. You can use the cash from selling your car anywhere as a deposit, even if the dealer tries to tell you otherwise.

What if my current car is worth less than I owe? Negative equity is a pain, but you’ll need to pay the difference. Some finance deals allow you to roll it into a new agreement, but read the fine print first.

Can I part-exchange a car with outstanding finance? Yes, but the settlement figure will be paid off first, and the remainder (if any) goes towards your new deposit.

Does the condition of my car really matter? Absolutely. A clean, well-maintained car is worth more. Get it valeted, fix minor issues, and don’t leave a boot full of empty crisp packets.

Will part-exchanging affect my credit score? No more than any other finance application. The finance deal itself is what matters.

Can I haggle on the part-exchange price? You can, and you should. Don’t take the first offer—dealers expect you to push back.

Next Steps / Call to Action

Ready to trade up? Start by getting a valuation for your current car, then compare finance options with Kandoo. Don’t let the dealer dazzle you with shiny wheels and confusing jargon—arm yourself with the facts, flex those negotiation muscles, and drive away knowing you’ve got the best deal possible.

Let Kandoo take the hassle out of part-exchange. Get in touch today and see how much smarter your next move could be!