As you consider replacing your old car with a new one, you may be wondering whether to trade or sell the old vehicle that you have depended on for so long. Which is better, trading it to a dealer (which gives you an instant deposit, should you purchase your new car there) or selling it? Let us examine both options.

Advantages of Selling a Car

You can get more money when you sell your car as opposed to trading it at a dealership. Most likely the money you get from selling your old car will be used towards a downpayment on a new car. A private buyer will not mark up the used car as a dealer would, which helps you get more money for the car itself. Private buyers are more willing to spend close the selling value of the car, while dealers are not.

Disadvantages of Selling a Car

Selling a vehicle on your own is never easy. The process of selling your car involves listing it online to attract possible buyers, meeting with prospective buyers, test drives, bank transactions, and possibly dealing with other financial companies.

While selling a car on your own will help you get more money for the car, it also requires extra effort on your part. Before you decide to sell your car, you need to decide if the extra time and energy are worth it.

Advantages of Trading a Car

car dealer

The process of trading a car is easier than selling. You simply take your old vehicle to the dealership, and the dealer will make an offer. The money offered by the car dealership serves as a downpayment towards your new car.

The best part of trading in your used car is that you do not have to handle any documentation or paperwork–the dealership will take care of it for you. It is as simple as driving your used car to the dealership, and driving away with a new vehicle.

Disadvantages of Trading a Car

The main disadvantage of trading a car is money. As mentioned above, you will not be able to get a price close to the retail value of your car, primarily because the dealer has to sell it at a higher markup to make a profit. Trade-ins remove the stress of selling your car, but in the process you will also lose hundreds or even thousands of dollars of the car’s value.

Depending on your location, money may not be a big issue when trading in a car. In some states, sales tax is computed based on the trade value of the old car and the purchasing price of the new car. This means if you acquire your new car for $20,000, and the trade value of your old car is worth $15,000 you will only pay a sales tax of $5,000.