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Pros & cons of trading vs. selling

Last updated: April 2012

Trading in


It's an easy way to dispose of your current car. Just turn it over to the dealership.

You will get less money than selling it yourself. At best, you should expect to get the vehicle's wholesale value.

You can use the trade-in amount as the down payment on the new car.

To get the best price, you will probably have to haggle with an experienced salesperson over the trade-in value.

There's a tax advantage. Most states charge sales tax only on the difference between the trade-in value and the new-car price.

Selling it yourself


This requires considerable effort, including placing ads, taking phone calls, dealing with strangers, and giving test drives.

You'll usually get the most money for your car, somewhere between the vehicle's retail and wholesale values.

You might not be able to sell your current car until after you buy your new car. So you won't be able to use the money as a down payment. If the old car isn't paid off, you could have an overlap of car payments until you sell it.

You will need to negotiate with a buyer, but most usually aren't as experienced at haggling as a professional car salesperson.

You might have to pay more sales tax on the new car, but if you get more money for the old car by selling it yourself, you could still come out ahead.

   

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