By Anthony Santiago - Editor-in-Chief

June 14, 2023

How to Trade In Car in Parent's Name

If you are like me, the prospect of trading in an old car to help finance your new vehicle is exciting. In fact, consider trading in the car your parents gifted you when you got your driver's license and started driving. 

I will cover what you need to know when you want to trade in a car or vehicle under your parent's name for a smooth process.

First and foremost, whoever's name is on the official title of the vehicle is legally allowed to sell or trade in the car. Buying or selling a car without a title is illegal in all states. 

If your parent far away, you will need them. I'm a person, or have them transfer the title to your name. 

Let's cover the steps to know if you are trading in your parent's car.

Key Takeaways

  • Understanding the process: When considering a car trade-in in a parent's name, it's important to understand the process and why it might be preferable. If your new car will still be in their name and under their insurance, it makes sense to include them in the process.

  • Preparing the required documents: Before embarking on a car trade-in, ensure you have all the necessary documents, including the car title, valid insurance, and loan documents with the payoff amount. Failure to have these papers can complicate the trade-in process and delay the transaction.

  • While trading in a parent's name can be a viable solution, you might consider selling the car privately to maximize profits. 

What You Need to Know About Trade-ins

Car trade-ins can be a great way to upgrade your ride or get some extra cash. But what about when the car is in your parents' name and not yours?

First, will the new car be in your name? Or your parents. The answer to this question will significantly impact if you will be required to transfer the title to your name or keep it under your parent's name. 

Also, remember that depending on your state, you can benefit from tax savings if you trade in the vehicle and end up purchasing another from the same dealership.  

By leveraging a car trade-in in your parents' name, you will essentially end up using the equity or value of the car as partial payment to help offset the final cost of the vehicle. In other words, the dealership uses the car's value to reduce the cost of the new vehicle.

However, there are some limitations to consider. 

Rules exist when trading in a car in the parents' name. For example, if you're under 18, you can't legally enter into contracts without your parents' permission. In addition, if there is a balance or lien on the vehicle, you must get your parent involved. 

Pros and Cons of Trading in a Car in Parents' Name

I will discuss some of the advantages of keeping it under your parent's name vs. putting the new vehicle under your name. 

There are a few factors to consider, especially if the car is in your parents' name. In addition to financing the vehicle, car insurance is also a big factor to consider. 

Advantages of Trading in a Car in Parents' Name

Trading in a car under the parents' name has certain advantages. If the vehicle is fully paid off and owned by the parents, there won't be any legal issues. However, if your parent lives in another state or a different location, you must transfer the title to you or have them sign and notarize it. Be sure to check with the dealership first regarding the best process.

Dealerships prefer older adults due to their experience and credit history, so the trade-in value may be higher if they can negotiate a financing deal. Some states have tax exemptions for transfers between family members, so trading in a car in the parents' name could lead to tax benefits.

If a parent has passed and is no longer with you, you will be required to have the title transferred to your name. Thus, you will be the legal owner of the vehicle. This can be done at the DMV with the death certificate. Otherwise, the probate of the estate can assist you. 

Advantage Car Insurance Rates

As mentioned earlier, drivers under 25 typically have the highest insurance rates. However, if you are kept under your parents' insurance, that cost would be 20% less. This is on average and depends on the vehicle's make, model, and year.

For example, a 16-year-old can have a monthly insurance rate of over $500 compared to an adult at 30 years old with $180 a month for the same coverage. 

Here it would help if you weighed the options on the car insurance costs, fuel, parking, and other expenses associated with driving a vehicle. 

Disadvantages of Trading in a Car in Parents' Name

Trading in a car in your parents' name has some drawbacks. One major one is that legally, your parent must authorize the trade-in. 

Also, the trading-in process may be complicated if ownership documents aren't provided. You are required to have the title of the vehicle to trade in or sell.

NOTE: It is illegal to sell a vehicle without a title. The only situation is if the title and the original owner are no longer found. Here, you will be required to get a Bonded Title. This is a financial security to ensure no lien or previous owners will claim ownership of the vehicle. 

Tax complications may arise when trading in a car registered under your parents' name since certain states need extra paperwork and taxes. In addition, as mentioned earlier, outstanding loans on the vehicle may need to be paid off to trade in the car.

Again, negotiating with dealerships may be tough without written proof that you are authorized to sell or trade in cars belonging to your parents.

How to Trade in a Car in Parents' Name

The process can be more complicated when trading in a car registered under your parent's name. In this section, we'll explore the essential steps to take when dealing in a car in your parents' name, including what documents you'll need to prepare in advance and how to find a dealer who accepts trade-ins in your parents' names. 


What You Need
to Do

How Long It Takes


Parents live near 

Discuss if they will accompany you to trade in at the dealership

Same day

Scheduling the best time to go to dealership

Parents far away

Get a Power of Attorney or Transfer the Title to you

2 - 4 weeks

Coordinating and time

Parent passed away

Transfer the Title to you. Must go to DMV and submit the death certificate

1 - 2 weeks

Any loans or balance becomes your responsibility

Preparing the Necessary Documents

To trade in a car in your parent's name, it's essential to have the right documents ready. To make the transaction smooth, you'll need the car's title, parents' driver's license, preferably the service records, and loan paperwork if the vehicle has a lien.

Usually, if it's your parent's car, it most likely is paid off. For simplicity's sake, you need the official title, and your parent present to sign the title to the dealership when all is said and done. 

However, be sure you have a fair market value of the vehicle. 

Understanding the market price will help you decide if the trade-in is fair. This will help during negotiations and keep you grounded should any counteroffer arise.  

Researching the Car's Value

Researching a car's value is key to getting the best trade-in deal. The first thing to do? Check online sources such as Kelley Blue Book and They provide accurate assessments based on make, model, year, condition, mileage, and location.

Kelly Blue Book, or KBB, is my go-to website for this information. They have the latest data and information as the market swings up or down. Use this guide to determine a fair market value. 

Secondly, check out Facebook Marketplace for recent listings of cars similar to your trade-in. This will provide an alternative option if you decide to sell privately. (We'll get into private sales a little bit later)

In addition, as part of your valuation, consider any significant upgrades or recent repairs made on the vehicle. 

For example, if you recently had the cooling system replaced, that should push your vehicle's value to the higher range. However, I always tell friends and family that you will only recoup some of your repair or customization upgrades to your vehicle. 

While possible, most buyers and dealerships will use the guides to determine the value. I always say that the market will dictate the price of anything that will sell. 

Cleaning and Prepping Car for Trade-in

Putting your best foot forward is crucial to maximizing the trade-in. It goes without saying that a clean car will fetch more money than a dirty car. 

Spend $20-$40 to get your car washed, vacuumed out, and tires shined. This will make a HUGE difference to the dealership.

It's a small investment to help maximize the value of your vehicle. Throw out any trash and clean the seats and carpet the best you can. 

If you have stains, use an all-purpose clean (APC Cleaner) to help remove the dirt and grime from surfaces. 

You don't have to invest a lot of time and money, but a good solid wash will go a long way. 

If your vehicle has a check engine light, consider addressing it before trading it in. It might sour the deal if it is used against you during trade-in negotiations.

In fact, if you get lowballed by a dealership, then you might consider selling your parent's car privately. 

Let's dive into this topic.

Alternatives to Trading in a Car in Parents' Name

Next, I will review a great alternative to trading in a car in your parents' name. The best option is to consider selling the car privately. 

The current car market is still hot, and used car prices have not fallen much. It's always a great option to sell on your own to maximize your value. 

Privately Selling the Car

By selling your car privately, you can earn more money than trading it in. Buyers are usually willing to pay more for a well-maintained vehicle, especially if it's a one-owner car. With a one-owner vehicle, you can command a higher price. 

But there are a few caveats and things to consider. It might take longer, and there are safety concerns when meeting strangers. However, I have had a lot of success selling my vehicles locally. 

Cash is always best when selling, but a cashier's check that clears is also a good option. Autotrader says private sellers usually get 10-15% more money than when they trade in their cars.

If my parents gave me a car, can I sell it or give it back to them?

You must figure out if the title is in your name or theirs. The person legally allowed to trade in or sell the vehicle is the name on the title. Talk with them to see what they want to do. 

Making the Best Decision for Your Situation

When trading in a car in your parents' name, it is essential to make the best decision. Weigh your options and consider various factors. Please talk with your parents to see what option works best for them. 

You are in a good position, especially with some equity or value in the trade-in. 

Remember the age and the condition of the vehicle are key. Research and plan to get the best value for your trade-in.

Good luck!

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Anthony Santiago - Editor-in-Chief

About the author

I am a passionate car enthusiast who likes to help people save money and avoid headaches when it comes to cars. I believe that everyone can find the right car at the right price. I share my tips and experience so you can learn quickly and maximize your next SUV, truck or car purchase.

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