Should You Trade Your Vehicle In or Sell Privately
Your car was a trusted pal and served you well for years, but it’s time to move on now.
You have two options: either trade it in for a brand new model at a dealership, or make a private sale and then buy that flashy new model of your choice.
Both the approaches have their pros and cons that can make it somewhat difficult to choose one. The decision really boils down to your priorities and needs.
Can you afford to go carless for a couple of days after making the sale – ? Do you need to sell it quickly? Which option is financially more beneficial out of the two?
Keep reading to understand what could be the right decision for you.
Factors to Consider Before Making a Sale
There are a few basic things you absolutely must do to ensure your car is sale-ready before you sell it in a private sale or at a dealer. These aspects of a car sale will ensure that you get the better deal.
1. Clean up
Make sure all routine maintenance is done in the car and you have the records to show for it. This means tire rotation and balancing, fuel changes, AC recharging, and of course vacuuming. Repair all dents and fill the scratches.
There are a number of repairs you can easily do yourself. Take out all your personal items and check to see that all the factory items (like jack, lug nut wrench, manuals, etc.) are in the car.
2. Car Value
Do your homework to find out what price your car should fetch on the open market using the Kelly Blue Books or Edmunds.
You will need to put in the make model of your car with the year. Make sure you are honest and realistic about the current vehicle condition as it will make a difference on the price you could get.
3. Check Your Loan & Paperwork
Find out if you still owe anything on the car. Look into additional payments and identify if you are upside down on the loan.
This means your loan is more than what your car or vehicle is currently worth. Make sure you also have all your paperwork in order before you get ready to sell your vehicle.
Trade vs. Private Sale
Once your car is ready for sale, it is time to decide between a private sale and a dealership trade-in. Here are some factors that can influence your decision.
This is the primary deciding factor for most people while choosing between a trade-in and a private sale. A big part of handling private car sales efficiently is preparing beforehand and setting a realistic asking price.
The same holds true for dealerships as well since you will probably have to haggle with an experienced salesperson.
However, dealerships come in useful when you have an existing loan balance or are upside-down on the loan. Dealerships are known to provide ‘wholesale auction price’.
This might be lower than what you get on the market through a private sale. However, with a dealership you can save money on other areas. For instance, you can use the current value of your car towards getting a significant discount on purchasing a new vehicle at the same dealership.
You can also skip making repairs as the dealership will take care of it. Private sales are impacted by the demand of a particular vehicle in an area. Different cities have different enviroments, for instance there are more car dealers per capita in Brisbane then there are in Sydney.
It is possible for you to not get the kind of resale value you are expecting at your location in a private sale. However, dealerships are known to have a vast network which can prove to be useful in making a sale.
While selling your car privately means that you have freedom to decide your own selling price, it does not always mean that a buyer will be willing to give that price.
Often it is inconvenient selling your car privately and having strangers come through your house all day and night – many of whom may not even be serious buyers. Whereas, at a dealership you know you are working with a professional and the quickness, and ease of process is worth taking a slight hit on the resale value.
Another major advantage of selling your vehicle at a dealership is that you pay GST only on the difference of the trade-in value of your current car and the purchase value of the new one.
For instance, if your new vehicle is worth $15,000 and you get $10,000 on your trade-in, then you only have to pay on the difference of $5,000 which is a lot of money
A simple reason why most people prefer dealerships for a trade-in is because of the simplicity and convenience included. Working with professionals helps to move things along quickly. They may also provide significant savings on your replacement vehicle depending on the area you live in.
Car sales can be extremely complicated when you are selling directly to another person. You are responsible for all the paperwork.
They can also take more time because unlike dealerships, people like to sit on offers and take their time. Private sales might not be an option when you are looking for a quick sale.
Basic Tid Bits
Dealerships are the most common way of selling a used car – which is what I did when I wanted to sell my car in a hurry. It is as simple as rolling into a dealership, trading in your car, and rolling out with a new set of wheels and a wad of cash.
The good thing about selling your car to a dealership is that they do these transactions all day long. The process is quick, smooth, and streamlined unlike dealing with the DMV. You can also get a better value at the dealership minus all the hassle.
However, if your car is older than 10 years and you are not in a hurry to get a new vehicle, you could opt for a private sale.
It’s crucial to note that you are responsible for all the paperwork in a private sale which can take multiple trips to the local Department of Transport Office. You will also have to get the car repaired and inspected by a certified mechanic.