When it comes time to purchase a new vehicle, you usually have two options regarding your old car. You can either try to trade it in to a dealer, which will give you a down payment for your new car, or you can try to sell it for cash. So which option should you go with? We are going to examine the pros and cons of each decision below
Trading It In
Trading in your car comes with many benefits, biggest of which is how easy it is. You simply drive your old car to the dealer, get an offer, and use that money towards purchasing your new car. The dealer will even take care of all the paperwork, just drive your old car in and out with the new one.
But trading in your car comes with one big disadvantage - money. The dealer will never pay you retail value for you car since they still need to make money reselling your old vehicle. So even though by trading in your car you avoid the hassle of selling it, you will lose hundreds if not thousands of dollars.
But there is a factor that will offset some of that lost money in a trade-in. Most states calculate sales tax based on the difference between the purchase price of the new car and trade-in value of the old one. So if you receive $10,000 for your old car in trade-in value and you purchase a new car for $15,000, you only have to pay taxes on the difference between the two.
Selling It Yourself
You will almost always get more money for your car when you choose to sell it. But it’s not always easy to sell your car. It’s not hard to create a listing on AutoTrader.com, but selling your car yourself means you have to spend the time meeting potential buyers, give out test drives and deal with bank and finance companies yourself.
Basically, there’s a lot of extra legwork involved when selling your car yourself. So the question you need to ask yourself is whether the extra work is worth the extra money. Another great alternative is to contact companies that pay cash for cars. Sometimes you will get more money than trading the car in without the hassle that comes with selling.