Trade-ins are fairly common. The process is quick and it is quite possibly the easiest way to get your old car off your hands. However, some people choose to sell the car privately and avoid bargaining with a dealer. But before dismissing the idea of trading in a vehicle, let’s look at some of the advantages of going that route and risks you can potentially avoid by selling a vehicle privately.
Advantages of Trading in a Vehicle
It’s quick and convenient
When you sell a vehicle privately, it can take a lot of time – you have to meet with potential buyers, weed out the good and bad leads, and the process of transferring of the title and ownership. When you trade-in your vehicle, the dealership handles transferring everything and you can get rid of your car in a day or two.
It reduces the price of your new car
The trade-in value of your old car goes towards the price of your new vehicle, lowering the amount that needs to be financed. If you own the car outright, not only will your financing be lower, but you’ll also get a tax break on your new vehicle since the dealership was able to knock off thousands off the sale price. For example, if your purchase a vehicle for $20,000 and your trade-in was worth $6,000, you’ll only need financing and pay taxes on $14,000.
You only have to deal with the dealership
If you don’t have time to market the vehicle for yourself, trading in your vehicle is the easiest option, since you only have to deal with one person – the dealership! All you need to do is show up, negotiate the deal, and you’re one step closer to buying a new car. There may be benefits to working with a dealer.
Disadvantages of Trading in a Vehicle
You may get less money for the car
When you trade-in your vehicle, the most money you can hope to get get from the dealership is the car’s wholesale value. Before you go to a dealership, be sure know the value of your vehicle by using Kelley Blue Book or NADA evaluations. This will prevent you from accepting just any offer and having the dealership buy the car from you for a lot less than it’s true value.
You limit where you can buy a new car
If you get a vehicle appraised and traded-in at one dealership, they may require you to purchase your next car from them. If the dealership doesn’t have the car that you want to purchase, then you can’t trade-in your car.
The dealership may not want it
This was common in 2008 during the surge in gas prices – dealers didn’t want trucks and SUVs because they weren’t popular with the public. Dealerships don’t like to gamble of vehicles that won’t make them a profit. Another reason the dealership may not want your trade-in vehicle is because they have multiple vehicles like that on their lot.