Once you’ve decided to buy a new or newer car, you might wonder what to do with your current one. Should you sell it privately or trade it in? There is no cut-and-dried formula to help you decide which is best. However, knowing the advantages and weaknesses of each can help you make the best decision for your circumstances.
What are the pros and cons of trading in your car?
It’s easy, quick and convenient. All you have to do is to take your car to the dealership you’re buying your new car from. They’ll offer you a price for it on the spot. The money will then go towards the cost of your new car. The dealership will also handle all major paperwork for you.
You are guaranteed to get money for it when you need it. When you sell your car privately, you are always running the risk of not finding a buyer or waiting for ages before you get one. With a trade-in, you are almost guaranteed money for your car regardless of its current condition.
You may get less money for it. The dealership is in the business of making money, so they’re unlikely to buy your car for its full market value. You’ll probably get a wholesale price for it, which might mean significantly less money than if you were to sell the car privately.
It can hurt your credit score. This might happen when you trade in your new vehicle in order to pay off the current financing on it, and then immediately take out another loan for a new vehicle. The financing company will do a hard check on your credit record in order to approve you, which could negatively affect your score.
What are the pros and cons of selling your car privately?
You’ll probably get more money for it. When selling privately, you can set the desired price for your car and possibly find a buyer who is willing to meet it.
There is more room for negotiation. You can negotiate with a private buyer to secure the ideal price. Most private buyers are not experienced at haggling prices like professional car salesmen, so there are better odds of getting a good price.
You’ll be able to reach a greater audience. You can list your car on a wide array of car selling sites such as AutoTrader and Motors.co.uk. This will expose you to a wider audience of buyers, increasing your chances of finding a buyer and getting the price you want.
It requires considerable effort. This includes placing ads, answering phones calls, meeting up with potential buyers, giving test drives and completing paperwork.
Begin your journey to financial freedom today – try our new Hero’s Journey tool!
MyWalletHero is here to help you learn about taking control of your money, whether that’s paying off debt, working towards a short-term money goal, or investing for your future.
Our latest tool can help you understand the next steps on your journey – simply choose a goal that best describes your current interests to get started.
It might take longer to find a buyer. This could be a major disadvantage, especially if you are relying on the funds from your current car to fund your new one. You could also encounter a lot of picky and dodgy buyers along the way.
Key questions to consider
Ultimately, the final decision will be up to you. But considering these questions could help you make the best decision for your needs.
Is your car a popular model? The more in demand the car is, the quicker it will sell. In this scenario, consider a private sale.
What condition is the car in? A car that’s not in the greatest condition is not likely to be worth the time it will take you to sell it privately and so, it might be better to simplify the process by trading it in.
What’s your financial situation? The money you get from a trade-in goes towards the cost of your new car from the dealership. If this approach works for you, then a trade-in could be a good option. If you need the money from the sale for another purpose, or if you don’t plan to buy another car with the money, then consider selling it privately.
How quickly do you need a new car? If you need your new car as quickly as possible, then a trade-in is the way to go.
If your car is a popular model, is in good condition and you are in no rush to sell it, consider a private sale. You are likely to get more money for your car this way.
But if the opposite is true, or if you simply don’t want the hassle of selling the car yourself, then simplify the transaction by trading it in.
Some offers on MyWalletHero are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.