By Anthony Santiago - Editor-in-Chief

June 23, 2023

Can I trade in my car with the check engine light on?

Yes, you certainly can. However, it's essential to realize that your car's trade-in value might take a hit and you will be financially disadvantaged since the dealership will adjust their trade-in value based on their blue book value. 

Depending on the severity of the engine code, the repair might be a simple O2 sensor, for example, but the dealership may discount the trade-in value by thousands of dollars. 

Potential buyers and dealerships are always wary of cars with mechanical issues, especially if there is a low oil pressure light.

They know a lit check engine light might signify severe problems lurking under the hood. Body damage or an accident history already reduces your vehicle's worth. Potential dealerships will couple that with repair costs for whatever issue is causing the warning lights to go off - and you've got yourself a significant decrease in trade-in value.

Remember, honesty is key when trading in vehicles. Make sure the dealership is aware of any issues before they perform their own inspection.

Try to obtain an estimate from Kelley Blue Book or other trusted resources beforehand so you have an idea about what your vehicle for trade is truly worth - even if it falls into the category of junk cars due to its Poor condition or Blown Engine.

If you are not interested in dumping more money into the vehicle and energy into getting it fixed, then it would be a good option to take care of the trade-in at one place where you buying your next vehicle.

Key Takeaway

  • Ignoring the check engine light can lead to costly repairs: It's important to properly diagnose and repair any issues causing the check engine light to avoid further damage and expensive repairs.
  • The check engine light can affect your car's trade-in value: If you plan to trade in your car with the check engine light on, the value of your car may be significantly reduced. It's best to fully repair the issue before trading in your car.
  • You may have better luck selling your car privately: Consider selling it privately instead of trading it in if it has a check engine light on. Private buyers may be willing to overlook the issue or appreciate that you have fully repaired it before selling.
  • However, I suggest listing the car on FB Marketplace as an alternative and selling the vehicle privately. I guarantee that you will make more money that can be put towards your next purchase, and the process is pretty straightforward. 

    Let's first revisit the downsides of trading in a car or vehicle with a check engine light.

    As I mentioned earlier, you might be worried if you can trade in your car with a check engine light. Most dealers will.

    In fact, in a recent survey, most dealerships with take the vehicle and, at a minimum, will offer $750 for a running vehicle.

    Can I Trade In a Car with a Check Engine Light On

    Dealerships would prefer to accept the trade to make a deal. Because they have baked-in profits, they can accept practically any trade. 

    Trade in that require too much reconditioning or repairs will be sent to auction for resale. 

    How Dealerships Determine Your Trade-in Value

    Many factors determine a dealer's decision. This includes the interior, exterior, overall condition of the vehicle, and potential engine trouble when they scan the car's computer. 

    Again, use sites like KBB to determine your current trade-in value. Most owners decide to trade in the vehicle when repair costs end up sunk costs for operating the vehicle. 

    You can review my other article about how to get top dollar for your trade-in.


    Presenting your vehicle in the best light possible will ensure the best offer from the dealership. However, you will be surprised how easily it is to sell your vehicle privately. 

    Due to the hot car market and the increased average price of new cars, many buyers quickly purchase a solid, running used car. Be sure to check the private party price of your vehicle before you finally decide to trade in your vehicle. 

    Again, if the dealership decides it's not worth selling on their lot in the back office, they will gladly send it to auction for wholesale

    What Exactly is the Check Engine Light?

    The Check Engine Light is typically related to the emissions in some way or another. A computer runs today's vehicles, and the car's ECU monitors the air, fuel, and emissions. 

    The check engine light will turn on if anything is out of range. You might feel no difference in the way the vehicle drives. It might drive the same but with the dash light on.

    This is due to the computer saying that something with the emissions or sensors is abnormal. 

    The most common reasons for this are:

    • Oxygen sensors
    • Spark Plugs
    • Ignition Coils
    • Vacuum Leak
    • MAF Sensor
    • Loose Gas Cap

    However, you will only know the problem with an OBD scanner. This handheld device is plugged into the vehicle's port under the dash to read the codes. 

    Again dash lights typically turn on when the car's computer system finds a fault in the engine, transmission, or emission control system.

    It could be something minor, like a loose gas cap. Or, it could be serious. If you ignore it, you could face expensive repairs or safety hazards. Plus, your gas mileage and power output could decrease. 

    My rule of thumb is that if the repair is less than $500, then it would be worth getting this fixed. However, if it costs more than $1,000, you must consider whether the vehicle's value is worth it.

    As of 2023, most used cars have increased in value pre-covid. I have estimated that most used car prices are $2,000 higher now. So you can rest assured that the money spent repairing the issue might be worth it. 

    Impact of Check Engine Light on Trade-In Value

    The check engine light can complicate the process of trading in a car. It signals an underlying problem, which decreases the car's value. 

    Experts say it can lower the trade-in worth by $1,000 or more. But if it only costs $500 or less to fix, maximizing the trade-in value or private party value would make financial sense. 

    As mentioned previously, addressing any glaring issues before trading in the car is a smart move. Check what's wrong, fix it, and turn off the light. Scheduling regular maintenance is also helpful. 

    To sum up the impact, the check engine light affects the car's trade-in value. It can lower it by $1,000 or more. Fixing the problem and maintaining the vehicle properly may boost its worth. 

    How to Trade in Your Car with Check Engine Light On

    Understanding that the check engine light will dramatically decrease the trade-in value is key. 

    Trading a vehicle with the dash light will put you at a disadvantage, BUT most dealerships will still accept the vehicle. 

    They're willing to eat the costs related to the trade-in to make the deal. 

    The dealerships will likely find the numbers to sell you a car, too, so just be aware. 

    Final Thoughts

    So, trading a car with a check engine light on is possible. 

    But beware: it will hurt the trade-in value overall. I recommend taking care of any identified problems. In addition, clean up the vehicle the best you can. Doing this can increase the value and your chances of a successful trade.

    Remember, car dealers must sell cars in good condition, so the trade-in will always be less than the private party price. 

    Take the chance to get the best out of your trade-in by putting the odds in your favor. 

    FAQs

    Can I trade in a car with the check engine light on?

    Yes. You can trade in a car with the check engine light on. However, the light may affect the value of your car, and you may receive a lower trade-in offer.

    Will turning off the check engine light before trade-in replace the issue?

    No, turning off the check engine light before trade-in will not replace the underlying issue that triggered the check engine light. Dealerships can access OBD diagnostic tools and detect if the check engine light was recently reset.

    Can I sell my car with the check engine light on?

    Yes, you can sell your car with the check engine light on. However, finding a buyer may be more difficult, and you may receive a lower sale price. If you don't want to fix the issue, you can try to list your vehicle on the FB marketplace. 

    What are the common reasons for the check engine light to come on?

    The most common reasons for the check engine light to come on fall under six categories: engine problems, transmission problems, emissions equipment problems, air/fuel delivery problems, electronic powertrain control problems, and ignition system problems. It is recommended to address the underlying issue before the trade-in or sale of the vehicle.

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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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