Handshake After Vehicle Trade In Between Couple and Salesman

Benefits of a trade-in over selling your used car privately

Unless you’re a first-time car buyer, one of the first and most important steps in the car-shopping process is actually car selling. You have to figure out what you’re going to do with your old car if you don’t plan on keeping it around as a backup. You have two options: trade it in to the dealership when you purchase your new vehicle or sell the used car privately on your own. We’re here to give you the rundown on just a few of the benefits of doing the former rather than the latter. But either way, it should positively affect your budget.

[ READ MORE: Trade-In Value: How To Get the Best Deal ]

Negatives of Private Sales

Before we dive into the direct benefits of a trade-in, let’s first go over some of the negatives of selling your car privately. The biggest drawback to this method is the hassle. You’re going to have to make sure your vehicle is in tip-top shape, take a host of images, learn all of the ins-and-outs so that you can answer potential buyers questions, figure out where to list it, potentially pay for classified ads, answer your phone and email at all hours of the day and night, sift through a host of low-ball offers and negotiations, let strangers take your vehicle for a test drive whenever it’s convenient for them, and worry about avoiding potential scammers or grand theft auto wannabes. That’s a lot of negatives.

Pros of Trade-In

Successful businessman in a car dealership - sale of vehicles to customersNow obviously, the biggest pro of trading in your vehicle is going to be avoiding all of that… but there are other benefits. For starters, trading in your vehicle doesn’t lower the price of the car your buying, but it does lower your monthly payments. The price that you sell your old car to the dealership for is applied directly to the cost of your new car, thus making what you have to pay after the fact much less than it would have been. Some dealerships will instead lower your down payment instead of monthly payments, or perhaps a combination of both.

Furthermore, there is the potential for some tax breaks as well. In most states, you only have to pay sales tax on the difference. So, whatever you sell your old vehicle for is deducted from the final sale price of the new car, thus avoiding the sales tax on the difference.

Hopefully, this information makes your decision on whether trade in your old vehicle or sell it privately a bit easier.