Should You Trade In Your Current Car?

Are you looking to get rid of your current vehicle? You’ve got several options: You could put a “for sale” sign in the window of the vehicle and hope an interested passerby spots it. You could list the car in the automotive classifieds or on Craigslist and field calls and emails from potential buyers who will likely haggle over price. Or, you can simply trade in your auto to a dealer and purchase a new one.

Value Your Trade

Trade-ins are fairly common – the process is fast and maybe the easiest way to get rid of your used car. However, some people avoid trade-ins entirely, preferring to weed out potential buyers themselves than bargain with a dealer. However, private party sales aren’t as simple as they might seem. Before dismissing the idea of a trade-in, learn what you may gain from going that route, and reconsider the potential risks.

Advantages of Trading In a Car

When deciding the best way to get rid of a car, there are several factors to consider. Before attempting to sell the car yourself, understand how a trade-in can help.

1. You Only Deal With the Dealer
If you trade in your car, the dealer handles the entire transaction from start to finish. All you need to do is show up, negotiate the deal, and you’re one step closer to buying a new car. While there are definitely benefits to selling a car yourself, trading in a car is the better option if you simply don’t have the time or desire to market your vehicle.

2. It’s Fast and Convenient
Private party sales take time and effort: There’s the task of advertising the car, meeting with potential buyers, and transferring ownership. It can take several weeks or even months to find a buyer. On the other hand, when you trade in your car, you can get rid of your old car in a day or two.

3. It Reduces the Price of Your New Car
If you own your car outright, the dealership will apply your trade-in amount to your new vehicle. For example, if you purchase a car for $26,000 and the dealership gives you $7,000 for your trade-in, you only need a loan for $19,000. And because the dealer knocked several thousand dollars off the final price of your automobile, rather than paying sales tax on $26,000, you only pay it on $19,000. Unfortunately, if you sell your vehicle yourself, you will pay taxes on the full purchase price.

Disadvantages of Trading In a Car

Trading in a car isn’t always the best option. It is up to you to consider the pros and cons before making your decision.

1. You May Get Less Money for Your Car
There’s no doubt that trading in a car to purchase a new one is simple and convenient. But too often, the amount offered by dealerships is much less than the private party value.

For example, the private party value of a 2009 Toyota Camry XLE in excellent condition with 30,000 miles is approximately $19,479. However, the trade-in value for the same car in the same condition is only $17,426, that’s a difference of about $2,000.

2. You Limit Where You Can Buy a Car
When a dealership appraises your car and agrees to buy your car, you’re obligated to buy your next car from that dealership. If the dealership doesn’t have a car that you want, you can’t trade in the car. There is no provision that allows you to trade in a vehicle at one dealership and purchase from another, nor at a later time.

Still not sure if a trade-in is right for you? Troy Honda is here to help. We welcome you to step behind the wheel for a test drive or take advantage of the specials we offer. For directions, visit our hours and directions page or contact us directly at 248-397-5598.