Should I Trade my Old Car In or Sell it Privately?

Jeff Youngs | Feb 24, 2012

The most common dilemma facing new car buyers is whether to trade their existing car in to the dealer,or sell it privately. The answer to the question is determined by what kind of vehicle you own, the condition of the vehicle, the availability of time, and the financial implications.

The best candidate for a private sale is a popular model, equipped with the kinds of features shoppers want, in excellent condition with low mileage and all the maintenance receipts. This kind of car will sell fast. If your current car does not meet these criteria, you might want to consider trading it in.

A car dealership will accept any car in any condition. They don't care about dents, dings, rust, rips or stains in the upholstery. Even if the car doesn't run, you can have it towed in as a trade. You obviously won't get top dollar for the car, but you will rid yourself of the vehicle and all of its headaches. Plus, trading a car in to the dealer is simple. In total, it takes all of 5 minutes and you can do it on your schedule any day you'd like. There is no investment of time or money, and after a few simple signatures the dealership takes care of all the paperwork.

On the other hand, selling the car yourself will put more money in your pocket. However, most private party buyers will examine the car top to bottom, inside and out. They will question the service history,accident history, the tear on the seat, and the wear on the tires. If your car cannot withstand the scrutiny (or you don't have the disposition or time to handle the task), it may be wise to trade your car in.

Selling a car privately can take weeks. It can take months if the car is not in demand (a convertible with a manual transmission, duringJanuary, in Detroit, for example). During that time, you will have to invest in advertising and keep the car clean as potential buyers will call to see the car on a moment's notice. You will need to be available to take test drives with prospective buyers, or allow them to take the car for a test drive without you. In most cases, you won't know that it is sold until the day the buyer arrives and takes it away. Once you've someone interested in the purchase, you will have to go to the DMV to process the paperwork and complete the state inspection.

As far as finances are concerned, the dealership will always offer you less than "trade-in" value for your car. The reason is because a trade-in will either be cleaned up and placed on the dealer's used car lot for sale (and only the best trade-ins go back onto the lot), or the trade-in will be wholesaled at an auction. The dealer is spending money and time processing paperwork, preparing the vehicle for sale,transporting the vehicle to the auction, and absorbing other expenses.Therefore the dealer will not pay much for a trade-in unless it is in near-perfect condition and will be an easy re-sell.

In nearly every case, the amount of money you would receive when trading a car in will be significantly less than what you would receive from a private sale. If your car is only a few years old, this could be a significant amount of money. On the other hand, if your car is in poor condition, or is a car in low demand, or is a car with high mileage, it might be best to trade it in to avoid a major investment of your time and money.

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