Should You Sell or Trade In Your Old Vehicle?
So you have decided to buy a new car, now comes the question of what you are going to do with the old one?
Your two main options are to sell it yourself or trade it in. You might also consider donating the vehicle to charity or giving it to a family member, but for most of us it will come down to trading it or selling it privately.
In a new survey conducted by BuyingAdvice.com, almost 40 percent of new buyers said they would be trading in a car when they made their next car purchase.
The option to trade is primarily about convenience. The dealer will take care of the paperwork, preparing it for resale and paying off any remaining loan cost. You are spared the phone calls, buyers coming over for test drives and being without a vehicle or having two while the transaction occurs.
But all this convenience comes at a price. Retired automotive executive Dan West says, “A dealer will try to buy your vehicle as cheaply as possible. He is in business to make a profit. And the profit on a trade-in comes from his ability to buy it for as little as possible and sell it for as much as possible. Also, he is not going to give you more for your car than he can buy it at the wholesale auctions. So, the most you can hope for is the wholesale price.”
A private sale gives you the chance to obtain a retail price for your vehicle, but at the cost of an investment of your time and energy.
Many online sites can give you an idea of the trade-in value of your vehicle. And by researching the used car market in your local paper and via the web, you can estimate the amount of money it will cost you to trade in instead of selling it yourself.
In many states there is a hidden benefit to trading in your car, because the sales tax is calculated on the difference in the price of your new vehicle with the amount the dealer gives you for your trade factored in. Check your local state regulations to see if this applies where you live.
Seventy percent of our survey sample said that they would be putting a cash down payment on their new vehicle. But only 20 percent of those surveyed said they would be using a mixture of cash and trade-in money. 12 percent planned on making a down payment only using the expected trade-in value, while 53 percent said they would use cash only for their down payment.
Whether you choose to trade or sell your vehicle yourself, there are steps you can take to maximize the return on your old car. It is worth getting routine maintenance done right before you get rid of your old vehicle, since both buyers and appraisers will check the condition of fluids to determine the state of engine wear. Also, have your service records ready and available in either case.
West advises, “If you are selling your vehicle privately, have a vehicle history report handy to reassure your buyer. A dealer will normally pull their own. But whether you are dealing with an appraiser or a private sale, be ready to disclose any paintwork or minor collision damage. If they discover this for themselves, they will probably view it with far more suspicion than if you are up front about it.”
If you are selling privately, West suggests doing careful research so you know what similar cars are fetching in your area and how many are on the market. If you want a quick sale, be prepared to place your price toward the bottom of the local range. If you need top dollar, spend a little extra on the detailing and presentation.
A wash and vacuum is probably a good idea whether you are selling or trading. But as West points out, a professional appraiser is unlikely to add value for a full detail, so spare yourself the cost.
Whether you are trading in or selling yourself, remember that you are negotiating. The best sale price will most likely not come with the first offer. Also, expect private buyers and dealers to be working at getting the best price for themselves. You need to be able to back up your asking price with research in either case. Be reasonable, be calm, but have a clear sense of what your goals are.
If you are involved in a trade, be careful that you don’t fall into the trap of becoming over-focused on the trade-in valuation. If a dealer realizes that the key to making a sale is giving you a certain price for your trade, he can give you the price you want. Then, still make his money by inflating the sale price on the new vehicle or giving you steeper finance terms. According to West, the key to a great deal is to get these three items-trade-in value, sale price and financing terms-as close to the goals you have set as possible.