To sell or trade?

When things change in our life and we need to replace our existing vehicle, what’s the best way to dispose of our old vehicle? Should we trade it in at the dealership or should we sell it privately?

When things change in our life and we need to replace our existing vehicle, what’s the best way to dispose of our old vehicle? Should we trade it in at the dealership or should we sell it privately?

Opinions on this subject vary widely. Sometimes these opinions are based on hunches rather than facts. So let’s look at the advantages of both and decide what’s best for our personal situation.

If we still owe money on our old vehicle we may not have a choice. The finance company we have our current loan with will have a lien on our vehicle, which must be paid in full before we can sell it. If we still owe more on the vehicle than the current market value of it, we would have come up with that difference to pay out our full loan. This may not be convenient or affordable. The amount we owe on our current vehicle is not relevant to what the current market value is. It’s only worth what it’s worth.

Trading our vehicle in at the dealership is much easier. All the paperwork is taken care of by the finance manager at the dealership. They will pay out our current loan and set up a new one. If we still owe more on our vehicle than the current market value of it, this difference can be built into the new loan. They will be responsible for putting together all the paperwork to ensure a smooth transfer of ownership. If there are any outstanding issues that come up the dealership will work through them with us.

If we trade our vehicle in, we won’t have the hassles or costs of trying to sell it on our own. Trying to sell our car on our own isn’t fun. Doing up and paying for ads, conducting test drives, filling out paperwork, and dealing with people we don’t know can be difficult and time consuming. People will want to grind us on the price. Buyers won’t be willing to pay the same price for a privately sold vehicle as they will at a dealership, but they will likely want everything fixed on our vehicle. There are a lot of scammers out there who will prey on unsuspecting sellers. Buyers may even return after the sale expecting us to cover the cost of repairs. Dealers will take our trade as is and assume responsibility for any repairs.

Most buyers today will want to see a Car Proof report on a used vehicle and a vehicle condition report done by a certified shop. This may be difficult and/or costly for us to provide.

Trading our car in at the dealership when buying a new or newer car also offers a tax benefit. We only pay tax on the difference between the price of the new vehicle and the value of our trade. Meaning we would need to get five per cent more selling it on our own just to break even.

We also need to consider how long it will take to sell a vehicle privately. How many payments will we make waiting to sell it and how much will our car depreciate during this time? Wholesale guides like Blackbook revalue used cars weekly, and not usually because they are going up on value.

The advantage of selling our vehicle privately though, is that we may get more money for it. The hope of getting more money for our current vehicle would be the only reason to consider selling it on our own.

Dealers buy vehicles at wholesale and sell them at retail. That’s the business they are in. So we won’t get a retail price for our vehicle.

There are a lot more resources available for us today to sell our vehicle privately. Online sites like AutoTrader, Kijiji, and Facebook give us access to potential buyers. The secret to posting on these sites is lots of pictures. The more pictures you put on these sites the better chance you have.

However, we need to be wary of people contacting us via these sites saying they can market our vehicle for a few hundred dollars and guarantee to sell it or they refund our money. But in order to collect the refund we may need to courier them a notarized copy of our registration. This can cost as much or more than the potential refund.

So what should we do? It depends on personal choice. If we have the time and wherewithal to market our vehicle on our own then we can likely get more money for it. If we owe more than the current market value of the vehicle, or want things to be easy and simple then trading it in is the right choice.

The other option would be passing your old vehicle on to a family member and save them the trouble of shopping for a new vehicle.

Catch Driving with Jens on CHON FM Thursdays at 8:15. If you have any questions or comments you can reach out to Jens Nielsen at, or on Facebook or Twitter: @drivingwithjens.

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