When the time comes to get a new car, the question that always remains is what to do with the old one. While donating a car is always a possibility, most people need the cash to get into a new car and not the tax break that comes with donation. This leaves two options, selling the vehicle to another buyer, or trading it into a dealership. Both options are worth considering, but each has drawbacks and benefits. The trade-in process is simpler, but selling a vehicle usually results in a higher payout. Here’s an overview of how to decide which is the right options.
Calculate the Car’s Value
First, figure out how much that old car is worth. Rely on sites like Kelley Blue Book to look up the approximate value of the vehicle, making sure to use mileage and any defects to come up with an accurate figure. Also look at the price similar vehicles being sold in your area, and what they are going for to come up with a working value.
Do You Still Owe on the Vehicle?
If there is still a loan on the vehicle, it’s usually simpler to trade it in rather than dealing with selling it as you have no clear title, but it’s still possible as long as the payoff amount is less than your asking price. If the loan amount is for more than what the vehicle is worth, trading it in is really the only option if you have your heart set on getting into something new.
The Advantages of Trading In
There are plenty of advantages to trading a car in. After learning about just a few of them it may become tempting to drive into a local dealership to make the exchange.
- Simple - The trade in process is simple. The dealership does all the required paperwork and usually offers a price in just minutes.
- Fast - A trade-in can be completed at the time of the new car purchase. That’s a huge benefit compared to the time it takes to sell.
- Takes care of down payment - Buying a new car often requires a down payment. By using a trade-in as a down payment not only expedites the process, it also allows the buyer to keep cash in their pocket.
The Downsides of a Trade in
Trading in a vehicle isn’t all positives. There are plenty of reasons that it makes more sense to sell off a car. Here’s a quick breakdown of the most common.
- Reduced value - A trade-in offer is usually a lower payout than selling the vehicle could generate. This difference can often mean hundreds of dollars lost to the new car buyer.
- Unfair valuation - When trading a vehicle in, it’s the dealership that is valuing the vehicle. It’s common to be offered less than what the vehicle is worth, even by wholesale standards.
The Advantages of Selling
- More money - When you handle the sale of a your vehicle, it’s easier to get a price higher than the dealership is willing to give.
- Payment in cash - Buyers that aren’t interested in getting a new car right away can enjoy the cash from a sale by using it on something else instead.
The Downsides of Selling
- Time commitment - It takes time to find an interested buyer willing to pay your asking price.
- Paperwork - There is paperwork involved with selling a vehicle, and it’s up to you to get it right.
- Transportation issues - If there is a time lapse between the sale of the car and the purchase of a new one, a buyer may find himself on foot in the interim.