Car owners are holding onto their vehicles longer than ever. Thanks to modern technology and improved machinery we’re opting to keep them on average three years longer compared to two and a half decades ago. Nevertheless, a time will come when you’re ready for a different car. Regardless of if it’s new or used, you can easily just trade in your current car and subtract the difference from what you’ll owe.
Or, would it be more advantageous to sell your car first then use the profit towards the purchase? If you’re wondering “Should I trade in my car or sell it?” we can help.
Determining which route to go is dependent on many factors. Both have their benefits and disadvantages, but with the right approach you can end up maximizing your return and still drive off the lot with that new car you’ve had your eye on.
Keep reading for further guidance on which option may be better for you.
Establish An Appraisal
Before you step foot on a car lot to negotiate, do your homework. Assess your vehicle and understand its worth. Come to terms with the fact you won’t receive any return on the initial price you paid, even if you’ve diligently kept up on maintenance.
Why it’s easy to decide on a price yourself, there is a multitude of factors that determine value ranging from condition, milage, to the brand itself. There are different methods for receiving appraisals, including the Internet and dealerships.
A reputable appraiser should use regulated methods in assessing your car’s worth. Having an idea of your car’s value beforehand makes it easier to negotiate rather than taking shots in the dark.
Should I Trade In My Car?
Once you’ve pinpointed your vehicle’s worth, you can research perspective cars you’d like to trade it in for. Before taxes and fees, this will help you understand how much of a difference you’ll pay.
The biggest advantage of trading in a car is convenience. You simply drive your old car to the dealer, complete the transaction, and drive home with your new car. Even better is this process usually involves formalizing paperwork, saving you a trip to the DMV.
This convenience, however, isn’t free.
Car lots and dealerships have strategies for generating revenue just like any other business. While your car may be valued at a certain price, this doesn’t mean they’re obligated to pay this amount for a trade in.
Although used cars only account for less than a third of a dealership’s total sales, they’re still considered more profitable than brand new cars. This is largely due to their internal resources to refurbish them at a low overhead.
When you negotiate over a trade in price, you’re trying to minimize the difference as opposed to the actual price of your old car or the dealer’s new car. Rather than haggle for a dealer to lower their price, counter your offer by asking for a higher return on your car’s appraisal value.
Another benefit to trading in your car is most states will only tax you on the difference you’ll pay as opposed to the actual new car’s price tag itself.
If a dealer is willing to work with you towards trading in, be open to reasonable negotiation. Also know it’s okay to respectfully walk away if you’re unable to come within a close enough agreement.
Should I Sell It Instead?
The best reason to sell your car is if you either aren’t in urgent need of replacing it or are seeking its entire appraisal value with no room for budging.
Selling your car on your own without the luxury of a dealership formalizing the transaction is a more drawn out process, but is practical if you’d rather receive its maximum value then use this towards a separate, new car purchase.
Most dealerships will gladly take your car off your hands with little to no questions asked. Posting your car for sale and fielding prospective buyers, however, can be time consuming. The upside is you possess more leverage in your asking price.
The Internet makes it easy to post a listing for your vehicle, as car buyers spend 59% of their time online researching regardless of if they buy a new or used car.
Yet, what you make back in a higher return you may somewhat lose in time and energy. Selling a car on your own requires a flexible schedule to meet with interested buyers and satisfying their questions. The sale itself can take much longer, too, compared to a dealership.
Factors To Consider
Everyone’s auto and financial needs are different. Purchasing a car is a big commitment and there are multiple things to consider before you decide on which option is right for you.
Are you set on a certain price? Do you have a new car already picked out? How soon do you need to sell? Most importantly, how much are willing to work towards getting a better car and/or receiving the highest return from a trade in?
Ask yourself these questions as you decide whether to trade in your car or sell it.
If your goal is replacing your car with another one you’ve already done your research on and feel confident in buying, then focus on trading in. Work with a dealer to establish a price difference you can both agree on, and remember there are other places glad to do business with you if you need to keep looking.
On the contrary, if getting the highest return is most important to you regardless of the next vehicle you buy then get to work in selling your car. Just be mindful and avoid making mistakes that could hinder your progress.
Ultimately, you don’t have to lock yourself into either option if you’re still unsure. Dealerships are willing to consult with any serious, prospective car seller and offer their time even if you end up not reaching a deal.
The best place to start is appraising your car and using this information when negotiating with a dealership or single person.
For those with questions similar to “Should I trade in my car or sell it?” browse our blog for weekly trending content with similar tips and advice about the car industry.