Sell Privately or Trade It In at a Dealership?

When it’s time to upgrade your vehicle, the big question many car owners face is: Should I sell my car privately, or trade it in at a dealership? You hear horror stories these days of what some unfortunate people have gone through selling their vehicle privately, but ultimately it really depends on your priorities—whether it’s getting the most money for your car, convenience, or time saved. Below I break down your options and offer a few suggestions!

Traditionally, selling your vehicle privately was the best way to maximize your selling price, but that has changed over time. Covid pushed prices of used cars through the roof as dealerships didn't have anything to sell for quite some time. Today, the market has settled and with more new vehicles filling dealership lots, the valuation for used vehicles has returned back to earth.

The short answer is a combination of both, privately and a trade option should be considered before making your final decision.

Pros of a Private Sale:

• Theoretically Higher Sale Price: You do have full control of the sale price and it could be higher than a dealership. However, a trade comes with the "tax benefit", which I will discuss later.

• More Control Over the Price: You can set your asking price and negotiate directly with buyers, giving you more control over how much you sell the car for. You could also use the same argument with a dealership.

Cons of a Private Sale:

• Safety Concerns: This is the biggest one these days. Inviting strangers to see and test drive your vehicle can feel risky. You’ll need to be cautious and take safety precautions, like meeting in public places, asking to see their license and always going with them for a drive with your plus-one.

• Time-Consuming: A private sale can take longer, from listing your car to finding the right buyer. You’ll need to take photos, write a detailed description, post ads, and be available to show the car.

• Hassle of Dealing with Buyers: Negotiating with potential buyers, dealing with low-ball offers, and coordinating test drives can be a pain in the bum and time-consuming.

Pros of Trading In:

• Convenience: The trade-in process is fast and easy and a great starting point to see what your vehicle is actually worth. You may not agree with the number, but it's a good start to the process. It also allows you to see if you would have positive or negative equity in the vehicle should you go the trade route (positive equity is the market value is more than the lien still owed on the vehicle and negative is the opposite, you owe more than the vehicle is worth). Equity can only be applied if you own the vehicle you are trading, if leased, this presents a slightly different scenario.

• No Need to Find a Buyer: The dealership takes care of everything—no need to worry about advertising your car, meeting buyers, or dealing with paperwork.

• Tax Benefits: As eluded to before, you can reduce the sales tax on your new vehicle by subtracting the trade-in value from the total price of the new car (assuming positive equity). This can save you hundreds, if not thousands of dollars.

Cons of Trading In:

• Lower Offer: Dealerships typically offer less than what you could get selling the car privately. They need to make a profit when they resell the vehicle, so their offer could be lower than what the car is worth on the open market.

• Less Control Over the Price: Dealerships have more power in setting the trade-in value, and their offers may be lower than what you expect, especially if your car is older or in less-than-perfect condition. Pricing is all about a conversation though. be reasonable and most dealerships will entertain your requirements.

Which Option is Best for You?

If you are willing to try both, here are a few simple steps:

Step 1: Have your vehicle appraised at a dealership and look at vehicles you would strongly consider.

Step 2: See what your vehicle is worth at market value, what they are selling for in your area with similar features, condition and odometer.

Step 3: Add 15% to the value you got from the dealership (the Tax Benefit). If you think you can still sell it for more, then selling privately may be your best bet if you can deal with the shortcomings of selling privately.

Step 4: If there isn't much of a difference (private vs trade), then just trade it in.

Step 5: Having decided you will trade it, find your next vehicle with the dealership first, then discuss the value of your trade. No salesperson wants to discuss a hypothetical vehicle replacement. Which one do you want?

Step 6: This could be the best of both worlds, a "Convenience Deal" where you find the buyer, agree a price you set and it runs through the dealership so you also get the 15% tax saving! This will be explained further in another blog post, but if you'd like to know more before its up, please feel free to email me: bill@findmywheelsconsulting.com

Final Thoughts

It’s a good idea to explore both options before making your decision. Consider getting an appraisal at a dealership to see what your trade-in value would be, then compare it with what similar cars are selling for privately. That way, you can weigh the trade-offs and choose the best route for you and don't forget to add 15% to the trade in value from the dealership!

Side note: If trading in your vehicle, remember that accessories you may have purchased for your vehicle don't add value to the trade, they're just a bonus to the new buyer. Eg. winter tires, cross bars, hitches, so you may wish to keep them if you can sell them for a few extra dollars.

I hope this guide helps you make the right choice when it comes time to sell your vehicle. If you’re still unsure or need help, Find My Wheels Consulting is here to help you with all the details, including evaluating trade-in offers and assessing private sale prices.