Are you ready for a new car? Is it finally time to part with your old standby; your good, four-wheeled friend, and move on? One of the biggest decisions in the car-buying process is what to do with your current car—trade it in or sell privately?
The answer depends on many factors, including what kind of vehicle you currently own and what shape it’s in, what kind of time you have available, and of course what is best financially. Trading in and a private sale both have pros and cons, but whichever way you go, keep one thing in mind: don’t make a snap decision. Investigate what you have to work with and potential end results of each option.
To help plan the best strategy for your particular scenario, let’s look at the good and bad of trading in and private sale.
How does Trading in a Car Work
The biggest advantage of trading in a car is convenience. Really, it couldn’t be much easier. Just drive your old car to a dealer, they make an offer on your car, and you can put that money toward the purchase of a new car. You don’t even have to deal with any paperwork; the dealer handles that end of things. Most dealerships will accept any car in any condition. Dents, rust, or stains are of no concern. In fact, the car doesn’t even have to run. Bring it in with a tow truck; it will all work out.
Naturally, you won’t see a big return on a car like that, but you’ll be rid of it, and you can focus on picking out something new and shiny. Head on in any day you like and in 10 minutes and a few signatures; you’re on your way to the new car lot.
However, there are some downsides. A dealer will not offer much for trade-ins unless they are in excellent condition for resale. A trade-in presents a good share of work for a dealer, including cleanup, sale prep, transported to an auction site, processing paperwork and title, and other expenses. That said, don’t expect a high return on a trade-in; the money received will always be much less than through private sale. On the flip side, if your current car is in low demand or has high miles or is just one big headache; you might be fine with letting it go for a song.
One key element to remember with trading in is taxes. While you might not earn back a tidy sum from your old car, tax is calculated only on the difference between trade-in value and the purchase price of a new car. If you get $10,000 for your old car and buy a new one for $20,000, you’re only responsible for the $10,000 difference.
How to Sell a Car Privately
Selling a car yourself gets you more money; simple as that. There’s no markup involved, so buyers are willing to pay closer to the car’s actual value. The best cars for private sales are of course those that are popular, with low mileage, lots of features, in great condition, with a clean maintenance history. If that sounds like your car, you’re in great shape.
But hold on, it’s not that easy. Even with an in-demand car, private sales are not easy. First, you have to create a compelling, attention-grabbing ad and then decide where to post it for the best chance of a sale. Then you have to field replies via phone, text, or email, and take the time to meet with potential buyers. When a buyer is interested, you have to arrange a meeting to look over the car and go on test drives. If they want to buy the car, that’s great. But that means dealing with banks or at the very least, traveling to a DMV office for title transfer and any inspection requirements.
Before all that happens, your potential buyer will want to look over your car front to back and inside and out. They will question every detail about the car, every time it was in the shop and why, how it runs, what’s great about it and what’s not. They will want to know where that smudge on the back seat came from and what’s that smell and was there ever a dog back here.
Be prepared to show buyers detailed maintenance records and have a plan on how you will address potential requests to take the car to a mechanic for inspection. The most frustrating aspect is not knowing if the car will sell until it actually leaves your property.
In the end, if you’re up for a little extra hassle, private sales are the much better financial choice. Try it and if it doesn’t work out, consider a trade-in.
How Should You Prepare a Vehicle For Sale?
Preparing your car for private sale is not difficult, as long as you stay organized and follow important steps like these:
- Know the market. Is what you have to sell what buyers want? Don’t try to sell your fancy convertible in December. Minivans are not especially cool but are in constant demand, as are trucks and commercial vans. Your ’68 Camaro is dreamy but will take longer to sell.
- Clean it up. Physical attraction applies to cars, too, and the better yours looks, the quicker it will sell. This means you need to do more than just a car wash. Vacuum and thoroughly clean the interior, don’t leave piles of junk in the trunk or floors, dust and polish the interior, give the tires a gloss treatment.
- Set a competitive price. Research similar cars and ask a reasonable amount. Don’t expect the world, but ask a price that fits your car, adding in a little “wiggle room” for negotiating.
- Have all maintenance records at the ready. Nothing impresses buyers more than seeing a well-cared-for car, with evidence to back it up. If you can show a buyer, you are a responsible car owner; it goes a long way in promoting a potential sale.
- Plan how to show the car. If you’re uncomfortable with buyers coming to your home, meet at a public place. They will want to test drive the car so know how you will handle that component.
- Be honest and answer buyers’ questions the best you can.
- Be patient. Selling a car yourself can take a long time.
