Selling a Car vs. Trading In a Car: Understanding the Pros and Cons

October 31, 2013

When it comes to trading in a car, there are some pros and cons involved that may make you lean toward selling your car, or just trading it in.

Selling your Car:

Pros

When you can sell your car, likely you will get a little bit more money from a private buyer, than you will if you were selling to a car dealership. Selling your car to a private buyer in your town will get you more money, which inevitably will likely be going toward your next car purchase since you will need something else to get around in. A new positive is that there are many avenues to sell cars. You can have a dealer in your town hold your car and try to sell it on consignment for you. You could also go the online route, and use a site like eBay and auction your car off to the highest bidder.

Cons

Selling your car likely will take much longer than trading in your car, which is a quick and easy turnover. Selling your car also will make you subject to taxes as you will have to claim that sale as income. In the end, if you sold your car for $5,000 for example, you will end up having to lose some of that to taxes. When you sell your car, you may need to get a lot of paperwork done, which may require days in the Department of Motor Vehicles, which is usually an unpleasant experience.

Trading In Your Car:

Pros

Trading in your car is an option that many people choose to do. A trade in allows for a smooth transition from your old car to the next. Another pro is that if you trade your car in to a dealer, you will have no ill will afterwards, but if you sell a bad car to a private buyer, you may have some legal problems. Trading in your car may lower the taxes on your new car purchase, as the tax often is computed from the price of the new car minus the trade in value, and not the full MSRP sticker price of the car. Trading in your car is the easiest of the options, and most smooth.

How to Trade in a Car for the Most Money >>

Cons

Trading in your car also does provide for some cons. First, the trade in value is never set in stone, and is usually less than what you may think your car is worth. Many people use the Kelley Blue Book, but often times that is a little higher than a dealer will offer. You often times can sell your car for more to a buyer, however, that creates more hassle and is never a sure thing. It may make sense just to trade in the car to avoid that hassle.

3 Hidden Costs of Trading in a Car >>

Trading in your car also makes your selection choices limited. It isn't like a sale, but more like a merchandise credit at that dealership, which means you need to select a car from that dealership, and that dealership only. Lastly, not all cars are great trade in options, and older cars with a lot of miles, will not net you that much money back.

Learn more about the Advantages and Disadvantages of Trading in a Used Car >>