Should You Trade-In or Sell Your Old Car?

Is it better to trade in your old car or sell it outright? In many cases, you’ll come out ahead if you opt to sell your car on your own. However, it is not an easy thing to do, which is why so many people decide to let the dealer take care of their old car.

When a vehicle is traded in, the valuation will be based upon the wholesale value of the unit. When an individual is selling or buying a car from another individual, the price is based on the private party value. If sold by a dealer, the price of the car would be the retail value. Depending on the vehicle, these three valuations can vary by several thousand dollars. Research your car’s value on websites such as www.kbb.com, www.nada.com or www.edmunds.com .

If undecided whether to trade or sell, the first thing a person should do is contact their lender and get the buy-out value for the current loan. If you owe $6,000 on your trade, the dealership is offering $6,200 and the private party value on the car is only $6500, it would be better to simply trade the car in. However, if the private party value was $7,000, it would behoove you to try and sell it individually, as there is potential profit of several hundred dollars.

Keep in mind the other points that will need to be calculated when making the decision to sell or trade:

Cleaning the vehicle: If trading in, just remove personal items. The dealership takes care of the rest. If selling, you will need to thoroughly clean the unit and get it detailed for sale. These costs will come out of your profit, so keep this in mind.

Repairing minor problems: If the vehicle has bad tires, a cracked or chipped windshield, missing knobs or other small things, or if it has scratches and/or small dents, you can leave as-is and the dealer will accept it. You might not get as much for the trade as if everything was repaired, but comparing replacement value vs. the wholesale dollars you recoup, it’s not worth it to go all-out in fixing “blemishes”. If selling the vehicle, however, you should easily recoup money spent in making these repairs. Do keep in mind that if the vehicle has several minor things wrong with it, repairing everything could severely cut into your net profits.

Legalities: When trading a vehicle, simply sign a few papers in the F&I office and the dealership will take care of everything. If selling a car, it is your responsibility to arrange the payoff on the lien. There will also be fees for notarization, title transfer, licensing and more. Since the laws vary from state to state, contact your local Department of Motor Vehicles to get info on everything that must be done to make it a legal sale.

And. . . You’ll have to pay for advertising, which can range from $25 or so in a small local paper to several hundred dollars if you go with a large used car website. Most importantly, don’t forget the time involved in cleaning, fixing, writing the ad, fielding the telephone inquiries and showing the car.

If you add it all up, there can be considerable profit in selling a car, rather than letting the dealer give merely wholesale on it. However, if the profit margin is slim, it could be better simply to turn it over to the dealership and let them worry about it!

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