Is It Better To Trade in or Sell Car

If you’re planning to sell your car you essentially have two options – trade it in to a dealership or sell it privately.

But is it better to trade in or sell your car privately? Both have their pros and cons in terms of convenience, sale price, time and effort required, etc.

Here’s an in-depth look from the perspective of a former dealer.

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Related Articles To Read:

• Can I Trade a Car Without The Title
• How To Trade In My Car
• The Best Trade In Value Car Dealership
• When Should You Sell Your Car?
• How Long Does It Take To Buy A Car

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Detailed Pros and Cons Analysis

Below are the key advantages and disadvantages of both selling your car privately and trading it in.

1. Convenience

Trade-In Pros

• Extremely convenient as the dealer handles everything – valuation, paperwork, loan payoff, etc. Just drive it there and walk away.
• No need to meet strangers or arrange showings. Much safer than private sales.
• Immediate payment without waiting for a buyer. Use as down payment on next car right away.

Private Sale Cons

• Very labor and time intensive. Must research pricing, market/advertise the car, vet buyers, negotiate, handle paperwork, etc.
• Risk involved dealing with strangers. Must arrange potentially unsafe test drives and exchanges of money.

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2. Time and Effort Required

Trade-In Pros

• Save huge amounts of time and effort vs private sale. Drop off your car and transaction is done.

Private Sale Cons

• Extremely lengthy process finding right buyer. Could take weeks or months.
• Constantly fielding calls/emails from prospective buyers, most of whom won’t follow through.
• Meeting strangers in person to provide test drives. Often many no-shows.

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3. Financial Considerations

Private Sale Pros

• Tend to get more money selling privately since dealers pay wholesale prices.
• Buyer pays all applicable sales taxes, not you.

Trade-In Pros

• Tax break in most states only paying sales tax on difference between trade value and new car price.

Private Sale Cons

• May still be making payments on old car while trying to sell it. Financial burden.

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Safety Issues With Private Sales

• High risk meeting strangers to show car and give test drives. Potentially dangerous.
• Scams are common. Fraudulent checks, stolen identities, etc.

5 Top Trade-in Online Calculators

Here are 6 websites I compiled where you can estimate the trade-in value of your car:

1. Autohitch (We pull real-time auction data just like the dealer does to tell you what dealers are paying)
2. Edmunds (www.edmunds.com/appraisal)
3. Kelley Blue Book (www.kbb.com)
4. Car and Driver (www.caranddriver.com/car-value-estimator)
5. Consumer Reports (www.consumerreports.org/cars/car-value-estimator)
6. TrueCar (www.truecar.com/trade)

These sites allow you to enter details about your car like make, model, year, mileage, options, etc. to get an estimated trade-in value. They use up-to-date market data on actual sales and transactions to provide accurate valuations.

Maximizing Sale Value

Below are some tips to get the highest value whether you trade-in or sell privately:

For Trade-Ins

• Thoroughly clean inside and out. Good appearance brings higher offers.
• Shop multiple dealers for best quotes. Values can vary greatly.
• Consider timing. Tax benefits on trade make most sense paired with buying another car.

For Private Sales

• Research pricing using KBB, Edmunds, NADA, and actual sales listings. Price accordingly.
• Utilize online classifieds and forums to connect with genuinely interested buyers.
• Vet buyers thoroughly. Confirm funds availability before finalizing sale.
• Negotiations expected. But start higher allowing room to go lower.

Trade-in vs Private Sale Example

Selling privately often nets more cash, but consider the numbers in your state. Below is an example based on a car that has a current market value of $15,000 in the state of Florida (Sales tax may vary in your state):

Private Sale

• Estimated Sale Price: $13,000 to $15,000
• Sales Tax Paid by Buyer: $1,050 (7% of $15,000)

Trade-In

• Trade-In Value: Estimated $9,000 to $10,000
• Sales Tax: You only pay taxes on the difference between trade-in offer and price of the new car
• Sales Tax Paid by You: If you purchase a $30,000 car and your trade-in was $15,000, you only pay sales tax on $15,000.

In this example, trading in would save $1,050.00 in sales tax. Reduce the private sale price accordingly when comparing options.

Can You Sell Your Car to a Dealership Without Trading it in?

Yes, you can definitely sell your car to a dealership without trading it in or buying another car from them. Most dealerships will buy cars from private sellers for cash, especially in the current market where used car inventory is low.

Tip: Dealers love buying cars directly from the public vs dealer auctions, so use that to your advantage when negotiating price.

When Not To Trade-in Your Car

There are certain situations where I would not recommend trading in your car:

Situation	Explanation
You have negative equity	You owe more on the loan than the car’s value. Trading in can be very expensive.
You need the cash	Selling privately likely gets more money than a trade-in. Only trade if you don’t want the selling hassle.
Time of year has low demand	Trade-in values are higher when used car demand is higher, like spring or when new models release.
You have a short-term loan	Some states allow lenders to charge a fee for early payoff of loans under 60 months. Trading could trigger this.

What About Car Buying Services?

Selling to third-party car-buying companies can be a middle ground between private sales and trade-ins.

They typically offer better pricing than dealer trade-in values, often pretty close to private-party pricing. However, they still fall slightly under what you could likely get selling directly to an individual buyer in most cases.

So, you essentially get the convenience of a trade-in with much of the benefit of a private sale while still not having to handle any paperwork.

To summarize key differences:

	Car Buying Service	Dealer Trade-in
Pricing	Above trade-in, near private party	Below private party wholesale prices
Convenience	Paperwork handled like trade-in	Very fast when buying replacement car
Payment	Cash payout	Credit towards new car

Expert Opinions and Recommendations

Both myself and other experts tend to agree that private sales will get you more money, with trade-ins favored for simplicity.

As Edmunds puts it: “Selling privately is more work, but nets the seller more money”. Kelley Blue Book also notes that “Selling your car yourself will almost always result in more money in your pocket”.

Most recommend at least considering private sale, if even for a short period, for potentially hundreds to thousands more, with trade-in as the fallback if unable to sell within a reasonable timeframe.

This is essentially what dealers do. We put cars up for sale on the lot and if they don’t sell within 60-90 days we take them to auction.

Tip: Quick trade-ins also make more sense when simultaneously purchasing another car to take advantage of that sales tax savings.

Best Time To Trade-in a Car To Get the Most Money

Just like selling or buying a car, there are times of the year or reasons that dealers are willing to pay more for a trade-in. Below is a list of the best times to trade in a car:

Timeframe	Details
End of calendar year (November/December)	Dealers want to clear old inventory for new models. More purchase incentives/rebates on new cars.
Late winter to early spring (February to April)	Used car demand rises heading into summer driving season, so trade-in values may increase.
When car has 100k miles or less	Trade-in values tend to drop after 100k miles.
When car is 3-5 years old	Depends on usage, but this is typical age range for 100k miles.
When you have positive equity	More equity provides larger down payment on next car.

Key Takeaways

There are good arguments for both trading in and selling privately depending on your priorities. Key points:

• Private sales bring more money but require much more effort and time on your part.
• Trade-ins are extremely fast and convenient, but result in lower offers.
• Shop multiple dealers to maximize trade-in value based on wholesale pricing models.
• Calculate exact sales tax differences to determine break-even private sale price.
• Pairing trade-in with another car purchase nets tax savings in most states.

Sources For This Article

• https://www.helfmandodge.net/tax-benefits-of-trading-in-your-vehicle/
• https://themilitarywallet.com/sell-your-car-privately-or-trade-in/
• https://www.caranddriver.com/auto-loans/a43032655/should-you-trade-in-car/
• https://www.driveo.com/blog/sell-your-car-privately-risks/
• https://www.hennessympg.com/sell-vs-trade.htm
• https://thinkcarsmart.com/blog/sell-your-vehicle/when-is-the-best-time-to-trade-in-or-sell-my-vehicle