Dealers Paying More Money for Trade-Ins Right Now

Trade-ins are commanding higher prices, according to a recent study by the National Automobile Dealers Association.

They're in demand due to a shortage of used cars.

NADA expects a 4% drop in used-car supplies throughout 2011, leading to a 5% to 10% price increase in used-car auction prices, which is one of the primary methods for car dealerships to acquire used vehicles.

When dealers can't get their vehicles at auction, they look elsewhere - namely trade-ins.

A lot of the price increases are due to pent-up demand.

With the economy improving, people are more able and willing to replace their old clunkers with a new car. GM and Chrysler have seen residual value gains of 15% to 20% for 2 to 5-year-old models, according to NADA.

Used Japanese, German and Korean brands have seen 10% price increases.

If you have a lease that ends soon, you can also take advantage of the situation by comparing your end-of-lease buyout price with the market price of the vehicle.

Some people are reporting price differences of several thousand dollars. It's certainly worth looking into.