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Should you trade in your car or sell it privately? | News

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Even if the inventory shortage drives up the cost of buying a new vehicle, there is one consolation for buyers looking to sell or trade in their car: higher used car values. The median price for all used vehicles among Cars.com dealers was $24,211 in July; that is 40% higher than in July 2020. When you are ready to unload your vehicle, you are faced with the choice: sell privately, trade in or sell to a dealer?

Related: Sell ​​your car

Selling privately usually has a financial advantage, while trading in or selling to a dealer is a faster and easier process. See which route is best for you and learn how to get the most money for your used car no matter how you sell it.

Why sell privately?

Selling your vehicle privately may be the best choice if the goal is to get the best dollar for it. Unlike dealers, private lot buyers are usually not engaged in buying and reselling vehicles for a profit. This increases the chance that you will receive a higher offer on the car. In a private sale, you can make multiple offers and accept the highest, while trading in or selling to a dealer leaves only a short negotiation time.

In some cases, selling privately can also mean getting more money for an older used car. Dealers usually send older, high-mileage trade-ins to a wholesale auction, which means extra costs for them – and a lower bid for you. Meanwhile, the inventory shortage has left few affordable options for buyers: Among Cars.com dealers, the median price for a 10-year (2012 model year) used car was $16,331 as of July 2022. Two years earlier, the median price of a 10-year-old (model year 2012 2010) vehicle was only $8,995. If your older vehicle is in good condition, it will likely spark interest among budget-conscious buyers.

Why trade in or sell to a dealer?

Sellers who value their time more than the proposition of extra cash will appreciate the convenience of working directly with a dealer. While a dealership is a one-stop shop where you can buy a new vehicle and trade in your old one, private selling requires more work and involves some uncertainty: you need to create an ad and list the vehicle online, stay in touch with potential buyers and meet strangers for test drives upon request. Even if you have an acceptable offer on the table, you can’t be wary until the deal is closed. This involves making sure you receive payment and transfer ownership of the vehicle.

If the financial benefit of selling privately doesn’t justify the hassle in your book, trading in or selling to a dealer is a less demanding alternative, but it still requires some prep work. As with a private sale, you will need to research the value of your car, collect all necessary documents and prepare it for appraisal.

Trading in a car not only saves time and effort, it can also provide a tax benefit in some cases to offset the financial loss. If you buy another car at the same time, the trade-in value of your used car can be offset against the purchase price, reducing the total amount of tax you owe. For example, if you apply a $10,000 trade-in amount to the $30,000 negotiated price of a new car, you’ll be taxed on the $20,000 difference instead of the full amount. (It’s worth noting that this benefit is only available in states that offer a trade-in tax exemption and tax auto sales.)

How to get the most money for your car

Whether you decide to go to the dealer or sell privately, taking the time to prepare can help you get more money for the vehicle. As the inventory shortage continues, causing used car values ​​to remain high, you may be surprised at how much your car is worth. Estimate the market value with tools such as the Cars.com auto sales page and receive valuations from multiple dealers or retailers such as AutoMax. Before the appraisal, prepare the car by cleaning it inside and out, making minor repairs and collecting all accessories such as extra key rings.

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