When it comes time to replace your car, the dealer will very quickly ask whether you have a trade-in. Trading in your old car can be a great bargaining tool, and a quick and easy way to offload your old car.
However, dealers are notorious for offering below-market rates.Why does this happen? Because the dealer still needs to sell your old car and make a profit.
The other option is selling privately, as you may potentially squeeze a few extra thousand out of the sale. However, private sales tend to take longer and are often less convenient, with far more admin, chasing potential buyers, attending inspections and negotiating than the typical trade-in.
Before selling your next car it’s worth understanding the pros and cons of each option and understanding the difference in value between the two before starting any negotiations with a dealer.
PRIVATE SALES PROS
•You will typically achieve a higher sales price (usually 10% to 20% higher).
PRIVATE SALE CONS
•The potential higher sales price will be offset against any repairs and maintenance required on the car.
•Depending on the condition of your car, you may not get the return on any additional money you invest in it.
•If you don’t do the work, you’re likely to find your car harder to sell and will have to lower your asking price.
•The time investment can be high, as you are responsible for preparing your car for sale, advertising and dealing with buyers.
•Your car could be on the market for some time.
•You could waste a lot of time dealing with time wasters, no shows and rude people.
•You will have to deal with people at your home or work.
•You will need to clean and prepare your car for every viewing. Depending on its condition, you may need to fully detail your car.
•You will need to publish your phone number.
•You’re likely to have to provide a roadworthy certificate and/or REVS check.
•Even though private sales typically put more money in your pocket, this is not a guarantee.
TRADE IN PROS
•The process is quicker and fuss free.
•If you’re buying a new car with the same dealer, they may give you a better rate on the purchase price of your new car.
•The condition of your vehicle is less important as they have the resources to get it up to scratch. They will, of course, reduce the value for anything major, but they’re unlikely to care if the car is due for a service or has a few minor scratches.
•The reputable ones will provide a REVS check and vehicle inspection report with the sale.
TRADE IN CONS
•Less money in your pocket (10% to 20% less).
•You will have to deal with car salesmen.
Which is right for you?
When choosing whether to go to a dealer or have a private sale, the key consideration comes down to whether the hassle is worth an extra 10% to 20% in your pocket. Selling privately is likely to net you a greater dollar return, but potentially be negated by the time and effort involved. Selling privately is not necessarily for the faint hearted. It involves red tape, time and dealing with the general public.
By contrast, selling to a dealer, especially if you’re trading in for another model, is much quicker and less stressful. If your car needs some work, then it’s typically easier to offload it to a dealer, and the cost of any work will reduce the potential return of selling privately.
If you decide to go down the private path, check out our article on How to sell your car privately.