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So you are ready for a new car. The next big decision is to trade in your car or try to sell it yourself. If you are very internet savvy and have the time and resources to sell it on your own then that might be the right decision for you. However, if you do not want to market the car (take and upload photos, choose the website or multiple websites for selling your car, meeting people at your home or a predetermined place for a test drive) then trading it in might be the best avenue. Are there benefits to trading in your car? Of course and with any option there are pros and cons of each. Below is a small snapshot of your choices:
- Sales Tax – did you know that when you purchase a vehicle from a dealership the sales tax that you pay is figured after your trade-in? For example, if you purchase a car and agree upon a sales price of say $20,000 and your trade-in value is worth $7,000 then the taxable amount is $13,000. In our area the sales tax is 7%. So by trading in your car you have essentially saved $910 (the trade in value difference).
- No hassle – you turn in the keys and the dealership takes on any reconditioning necessary, safety check, drivability issues, etc. You simply drive away in your new car! If there is a payoff the dealership will, by law, pay off your car loan.
- Value – the dealership will give you what wholesale value is. Which typically means that when you have done your homework and used a valuation service such as KBB, you need to be prepared to take less than private party value shown. Why? Well the dealership is now assuming all the costs associated with getting your car ready for re-sale. Some of those items might include reconditioning the interior and exterior, new tires, bumpers, etc.
Selling Outright Pros:
- Value – here is where your homework has paid off. You know your vehicle, you know any issues, and the service records. The private party value can be researched and values are predominately a guide and depending on the market you may be able to get more than what you would receive from the dealership.
Selling Outright Cons:
- Time and Effort – I don’t want to discourage anyone from selling your own car but be prepared for the amount of work that can be involved. It is imperative that you take quality photos, and be prepared to market your car until it sells. Craigslist is a great tool to list your car at no cost but I have had some people get scammers and you do have to be prepared to show the car to complete strangers, possibly at your own home. Autotrader is another website that I have experience with and for a fee you can also get to see how many page views your vehicle has had.
Overall it depends on your lifestyle – do you have the patience to wait until your car sells? Or would you rather take less for the vehicle and not deal with the hassle? What has been your experience?