For many borrowers, trading in their old car for something else is worth it. Two birds with one stone – out with the old and in with the new. However, selling your car yourself could yield more profit. What’s convenience worth to you?
Trading In vs. Selling Privately
Trading in your car can be worth it for convenience. Trading in your vehicle can be a quick and easy way to sell your car, and you can use the proceeds to lower the cost of your next one.
The dealership handles most of the trade-in paperwork, as well. Typically, the most you’re involved is during the evaluation process, negotiating, and then signing the title over to the dealer.
Selling your car privately means taking care of the details yourself. You have to:
- List the vehicle for sale
- Find a buyer
- Agree on a price
- Draft a bill of sale
- Sign the title over to the new buyer
- Head to the Department of Motor Vehicles or Secretary of State to transfer ownership
Arguably, the toughest part of selling your car yourself is listing it and finding a buyer. This can take a while, and haggling is a common step in private-party transactions. And you may never actually find a buyer that’s willing to pay the price you’ve listed the car for!
When it comes to ease, convenience, and speed, trading in your car at a dealership is the clear winner. But what about the profit?
Which Gets Me More Cash?
While no one can guarantee that you’re likely to get more money by selling your car privately, it's often the case.
There are different vehicle values: trade-in value, private-party value, and retail value. Trade-in value is what a dealer may pay you for your car, private-party value is the going price for a vehicle in the private market, and retail value is the price the car may be listed for on a dealer’s lot. These are all estimates, of course, and valuation websites offer these estimates to give you an idea of what your car is worth in the current market.
Trade-in value is almost always lower than private-party value. This is due to the fact that dealerships handle most of the paperwork involved in selling a vehicle, and most dealers sell the trade-ins that they buy. Dealerships have to take into account the labor involved in prepping a car for sale before trying to make a profit. While you may yield less cash by trading in, you can simply sign the title over and walk away without having to do more work yourself.
If you decide to sell your vehicle privately, you can list the car for whatever price you deem acceptable. The buyer and you handle all the paperwork yourselves, and there's no overhead to worry about. However, the extra money you may gain from selling your car on the private market may mean having to spend more time and energy.
If you don’t have the bandwidth to sell your car yourself, then trading your car with a dealership can be worth it, even though you may get less cash out of the transaction. Additionally, if you have a clunker and a dealership can't accept your car, visit our resource center to learn about a different way to sell your car.
Looking to Get a Car Loan?
If you’re selling your current vehicle with the intention of getting another car, and you need to finance, then your trade-in could help you meet the down payment requirement of an auto lender.
Your credit score is a large part of your ability to take on new credit. If your credit score isn’t great, then a trade-in is a great asset. With poor credit almost always comes a down payment requirement, but trade-in equity can help you meet or exceed a down payment requirement.
Typically, subprime lenders that assist bad credit borrowers at special finance dealerships require a down payment of at least $1,000 or 10% of the vehicle’s selling price. You could also combine cash and trade-in equity to make more of a dent in the cost of your next car.
Let’s Get You on the Road!
Having a trade-in when you have bad credit could assist you in meeting the requirements of an auto lender. However, it can be difficult to find a lender that’s able to work with tough credit situations. Here at Auto Credit Express, we want to make it easier for you to find a special finance dealership that’s signed up with bad credit lenders.
Complete our free auto loan request form, and we’ll look for a dealer in your local area. We have 20 years of experience in connecting bad credit borrowers to special finance dealerships, so get started today!