Selling vs. Trading In a Car
When it's time to transition from your used car into another model, it can be tough to decide if you'd prefer to trade it in or sell it on your own. While selling may seem like the most financially appealing option, trading in could minimize hassles.
Determine Your Car's Value
The starting point for deciding whether to sell your car or trade it in is to have a clear understanding of your car's market value. A website like Kelley Blue Book can give you a solid estimate of how much you could sell your car for to a private party, and what you might get when you trade it in. The steps are easy:
- Fill in your car's features and mileage.
- Select whether you're looking to sell or trade in.
- Choose the condition of your car (excellent to fair).
Once Kelley Blue Book returns your estimate, you can use that as the benchmark for your decision to sell or trade it in.
Know What You Owe
It is possible to sell your car if you still owe money on it, but it's a little tricky. If your car still has a lien, you'll need to contact your financing company and get a pay-off amount. Hopefully this is less than your asking price, but you'll need to make sure you're not upside down on your loan.
In simple terms, if you owe more than your car is worth, trading it in may be your only option.
Option 1: Trading In Your Car
Advantages of Trading In
One of the major advantages to trading a used car in over selling a car to a private party is convenience. Dealers will handle all the paperwork, and all you'll have to do is sign your name. In addition, if your car has any minor defects, you won't have to worry about getting them repaired before trading it in—the dealer will handle fixing them before turning around and reselling it.
If you've kept your car in good condition, you can also use it as a decent down payment. While having cash is excellent leverage, your car can also be a helpful factor in reducing the price of your new car.
Disadvantages of Trading In
Remember, dealers consider a car that's traded in for its wholesale value, not its retail value. This means that while you may have determined your car's market value, expect the dealership to offer you a price that's at least half of what you'd get if you sold it privately.
Option 2: Selling Your Vehicle
Advantages of Selling
The most basic benefit to selling a car to a private party is the cash. First, you are more likely to get as close as possible to your ideal asking price when you sell your car yourself. You'll have more flexibility to negotiate with a private buyer, and you can hold out until you get an offer you're happy with.
Second, you'll have the cash. This is money you can use as the down payment on the purchase of a new car, or you can spend it in some other way.
Disadvantages of Selling
The biggest disadvantages of selling your car vs. trading it in are time and paperwork.
When selling your car yourself, you're at the mercy of the buying market, and you'll need to wait as long as it takes for buyers to come calling. While there are plenty of ways to promote your vehicle for sale, you'll need patience to find the right offer.
In addition, all the paperwork for the sale falls on you, so don't skip any steps. Otherwise, you could put yourself in a position of liability that could be dangerous.