When you're ready to buy your next car, should you sell your old car privately or trade it in? There are benefits to both options, so it really comes down to what's most important to you — time or money.
The Benefits of Trading in Your Car
Many consumers agree to trade in their old vehicle when buying their next car. There are several benefits to doing this.
- Convenient and Easy - Compared to selling your car by yourself, trading it in is a breeze. All you have to do is drive the car to the dealership, have them appraise it and make an offer, and sign a few papers. Selling a vehicle privately can require more time, effort, and money than you'd think. Not to mention the fact that it can be a hassle to handle the advertising, the negotiation with prospective buyers, and the paperwork involved. Trading it in is a simpler and more streamlined process.
- Down Payment Help - If your car is paid off or you have equity in it, you can apply its value to your down payment. This reduces the amount you need to finance, which will not only lower your monthly payment, but also the overall interest charges you'll pay.
- Possible Tax Advantages - In 42 of the 50 states, you only pay sales tax on the difference between the price of the car you're buying and what you're getting for your trade-in. For example, if you're buying a $17,000 car and your trade-in is worth $3,000, you’ll only pay sales tax on the $14,000 difference.
The Biggest Downside
The biggest drawback to trading in your car is that you can typically expect to be offered less than you'd be able to get if you sold it yourself. Trade-in offers are usually lower because the dealership has a lot to consider, such as:
- If they're going to sell it or send it to auction
- How much they can sell the car for
- How much the vehicle will wholesale for at auction
- The cost of reconditioning the car
- How long the vehicle might sit on their lot
These factors and more are what car dealers take into account when appraising your trade-in. While this may lead to a lower offer, keep in mind all of the extra work it takes to sell the car yourself.
Just make sure you have an idea of what your trade-in is worth before getting it appraised. Use websites like Kelley Blue Book to get a rough estimate. If you think the amount you're being offered at a dealership is too low, then maybe you should take it to another dealer or sell your car privately.
The Bottom Line
If you want the most money, you'll likely have more success with a private sale, although you'll have more work to do. If you want convenience and a tax advantage (in most states), trading it in is the way to go.
Regardless of what you decide to do, Auto Credit Express wants to help you with the purchase of your next vehicle. We help car buyers struggling with credit problems find a dealership in their area that knows how to work with bad credit.
Our service is free and it doesn't put you under any obligation. Get the process started by filling out our secure car loan request form today.