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Selling Vs. Trading-In

What you don't know can cost you thousands

When you're out shopping for a brand new vehicle, perhaps the most boring topic on earth to you is your old vehicle. After all, it's headed out of your life, never to return. But before it goes, it has one more chance to bring you pleasure or grief. Depending on whether you trade it in or sell it privately, there can be a significant swing in its net value to you. How do you make the right choice in your particular circumstances?

Time Is Money

The money you get out of your old car is tied to the difficulty and risk level of the way you choose to sell it. Bring it into a dealer as a trade-in for a new car, and you'll get the lowest value for it. This is because dealers are in business to make money (and not overpay for the used cars they buy), and they are absorbing the cost and risk of reselling your old car to someone else. This cost is not insignificant: it includes a thorough cleaning, safety inspection, possibly minor repairs and dealer overhead. Regardless of the terrible sob story the dealer might feed you about how he won't make a nickel on your trade-in, be assured that he will. If he's not, then he's making it on the new car he's selling you. Either way, his kids will not go to bed hungry. Nice vehicles with modest mileage might be kept on the lot and eventually resold by the dealer who bought it from you. Tired vehicles are almost invariably sent off to auction and end up sitting on somebody else's lot with a sign that says "Cream Puff" sitting on the windshield. Certified used programs also come into play in the process of finding a new home for your old car, provided it qualifies.

Shop Your Trade

If you're not under time pressure to get your new car, however, there are more options open to you even if you want the convenience of a trade-in instead of a private sale. The same way you shop for the best price on your new car, you should also shop for the best trade-in valuation on your old car. Though it can be a tiresome process, working out the bottom line cost of the total transaction at two or more dealers can save you some serious cash. When the dealer realizes that the valuation they put on your old car is as important to you as the price and terms of the new car, they have a lot less wiggle room. And by comparing the true bottom-line cost of the transaction, you can determine which dealer is most willing to offer you a fair trade-in value.

On Your Own

Of course, if you're truly motivated to get the most money out of your old car, the best tactic by far is to sell it privately. You stand to pocket thousands of dollars more with a private sale than by going the trade-in route. The difference can be enormous, to the point where it's well worth the time and trouble to sell it yourself. An example: as of this writing, Kelly Blue Book lists a trade-in value of $12,200 on a 1999 Honda Odyssey EX minivan with normal mileage and in fair condition. The same vehicle's full retail price is $20,845, if it was sitting on a used car lot all spruced up and ready for sale. The private-sale price falls somewhere in between, but it would likely beat the trade-in value by four or five thousand dollars.

What's involved in selling it yourself? You'll need to spend about $100 on advertising (concentrate on the popular on-line used car selling sites for the best and fastest results) and you'll sink a significant amount of time into dealing with calls, emails, and test-drives. Give the vehicle a thorough cleaning and fix any minor items like burned-out bulbs and minor defects. Find the market valuation for your car online (you want the resale valuation, not the wholesale valuation) gather up all your service records and do your best to stand by your price. Odds are, you'll come out far better than if you traded the car in.