When it’s time to swap out your current car with a new ride, you have several options. The two most common options are to sell your car yourself, or to trade in your wheels at a dealership. Each option has its own pros and cons.
Here are some things to know about both choices:
What to know about trading in your car
To trade in your car at the dealership, they will assess its value. You’ll hand over your keys and drive away in a new-to-you car that you buy from the dealership that same day. This method is perhaps the easiest way to be free of your old car and buy a new one, But there may be other benefits as well.
After your old car’s value is calculated, you can apply it to the down payment on your next vehicle. This can reduce your out-of-pocket expenses. Additionally, depending on which state you’re exchanging cars in, it’s possible to get a tax break by going this route, Consumer Reports pointed out. Most states only charge sales tax on the difference in values between the two cars.
The biggest downside to trading your car in is the valuation. The dealership will most likely offer a price closer to what it’s sold for wholesale than you could get on your own. To get the best price the company is willing to offer, you’ll need haggling skills. But even then, if you’re looking for the biggest payout, selling the car yourself may be the best choice.
What to know about selling your own car
The biggest perk to taking matters into your own hands and handling the sale of your car personally is money. Most of the time, people who sell their own cars will get more money for the vehicle than they would have had they brought it to a dealership for a trade. You could walk away with more money with a do-it-yourself sale than through a trade-in, according to AutoTrader.
But while you’ll wind up with a thicker wallet (at least until you buy your new ride), selling a car on your own requires some work. You’ll need to place ads, field phone calls, and meet and go on test drives with potential buyers, many of whom will probably be strangers.
Additionally, if you need to buy your new car before you’re able to sell your old one, you might find yourself strapped for cash. Plus, the funds you bring in from the sale won’t be able to go toward the new car purchase. Nonetheless, many car owners find the hassle worth their while for the bigger payout.