How does part exchange work?

Updated: 22 March 2024

Buying a car is exciting but it can be one of the biggest purchases you’ll make. You can reduce the amount you pay up front or on finance by using your old car as part of the deal. This is known as part exchange.

How does part exchange work and is it right for you? Here’s our guide to help you make your decision.

Part exchanging means that you use the value of your old car as part of the payment for your new car. If you choose to part exchange your old car, the dealer puts a value on it and effectively buys it from you. However, rather than giving you cash for your old car, the dealer subtracts its value from the price of your new car. So you only pay the difference between your old car’s part-exchange value and your new car’s price.

Here’s an example:

Your new car has a price of £15,000. The dealer offers you £5,000 in part exchange for your old car. That £5,000 is subtracted from the £15,000, so you only have to pay the remaining £10,000.

There are many factors that determine how much a used car is worth. These include its make and model, age, mileage, condition, whether it’s fitted with any desirable options and even its colour. How well it has been looked after also will have a big impact – does it have a full service history and a clean MOT record? All of these factors and more affect how a car’s value depreciates over time.

Dealers generally refer to one of the used-car valuation guides compiled by industry experts, which take all the factors mentioned above into account, or the dealers use their own calculation system.

Many people choose to part exchange their old car because it’s very convenient. You don’t need to take out an advert to sell it, or deal with people who want to see or test drive it. You simply swap it for your new car.

The disadvantage is that you may not get quite as much for your old car as you would if you sold it privately. In effect, it’s the price of convenience.

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There are a few things you should always do before you move your old car onto a new owner, including when you’ve part-exchanged it. Gather all the paperwork you have for the car including the service book, any garage receipts and the V5C registration document. You don’t need to produce an MOT certificate when part-exchanging a car, because all of that information is available online. 

You also need all the sets of keys for the car and any parts or accessories that came with it, and you should give it a good clean inside and outside.

If you’re part-exchanging your car, the documents you need are the same as those required when buying or selling a car. 

Depending on who you part-exchange your car with, you may need your bank card or a bank statement, dated within the past three months, showing your sort code and account number, as well as a photo ID, such as a driving licence or passport. On top of that, you may be asked for recent documents that confirm your address, such as a bank statement or a utility bill. The address needs to match that on the V5C.

Whether you’re glad to see the back of your old car or sad to see it go, once you’ve part-exchanged it you don’t have to think about it any more. (Unless you want to, of course.) Depending on the car and who you part exchange it with, it could be resold straight away, sent to auction or even (but less likely) sent to a scrap yard or for recycling.

In fact, one of the benefits of part exchange is that you hand over your old car at the same time as you get your next car, so it’s no longer your concern. It means you’re never without a car and you don’t have to deal with selling your old car, or finding somewhere to park or store it until you can find a new owner for it.

It's possible to part exchange a car before you’ve fully paid off any PCP or HP finance you’ve taken out on it, although not all car dealers offer this service.

If your current car has outstanding finance on a PCP or HP agreement with another dealer or lender, some car dealers will still accept it as a part exchange as long as its valuation is higher than the amount you still owe that dealer or lender. To do so, you need to let the dealer know the correct settlement amount and supply them with a settlement letter, which you can get by calling or emailing the lender on your finance agreement.

You’ll find lots of used cars for sale at Cazoo, all available to buy through our trusted dealers.

Cazoo makes selling a car just as easy – just enter a few details for an instant online valuation. If you accept the offer our partners will get in touch to arrange payment and collection of your car at a time that suits you.