Is It Better to Trade In Your Car or Sell it Privately?
Is It Better to Trade In Your Car or Sell it Privately?
Posted on July 6, 2022
Do you trade your old car in and enjoy the simplicity and convenience or sell it privately for a little more money? Selling your old car used to put you in two distinct camps, those who needed every cent would sell privately. Those who wanted a safe, simple transaction traded it in.
That decision between whether you trade in or sell privately is now easier than ever as our auto loans team explains.
Trading in your old car to a dealership
People who traded in used to know they were getting less for the car in return for a safe, secure transaction when they bought a new car. Now, with the used car market like it is, trading in, or even selling your old car for cash to a dealership makes much more sense.
The binary choice between cost and convenience is no longer so black and white.
The strength of the used car market means there is real demand for quality used cars. People are keeping cars for longer and not selling them so readily. This has caused a shortage of quality used cars, which increases their value.
A value that dealerships are now willing to pay.
There is now much less of a divide between trade in values and what you would get selling privately.
Given the downsides of selling your old car yourself, that makes it a no-brainer to trade it in.
How does trading in your old car work?
If you haven’t traded in before, it’s a very simple process. Essentially you sell your car to a dealership and have the value taken off the price of a new car.
For example, you’re buying a car for $40,000. Your trade in is worth $5,000 so you only have to pay $35,000 for the new car (plus fees and taxes).
If you’re taking out a Freelton auto loan to pay for the car, it means you need to borrow less to pay for the car.
The process works a little like this:
- Clean and prepare the car ready for sale
- Bring it to a dealership to be appraised
- Shop for your new car while we check your old car
- We offer a cash price for your old car
- We deduct that price from the cost of your new one
- If you’re using an auto loan, you only need to borrow that reduced amount
- Sign the auto loan, buy the car
- Drive away happy!
That’s all there is to it!
No having to write ads, take dozens of pictures, answer multiple obvious questions, allow vehicle inspections and test drives and no payment anxiety or risk of theft.
It’s all done in the comfort of a dealership between reasonable people.
Reasons to Sell Your Car Privately
There are still advantages of selling your car privately.
Separate transaction than buying the car: If you trade in your old car while buying a new one, some dealers will combine the two so you think you’re getting a better deal than you are.
Sell modified cars: If you have upgraded or modified your car in any way, selling privately is still best. Dealers don’t like modified cars and will often not purchase or not offer a good price.
Get top price: While dealerships offer better prices than before, they still need to make a profit. So, while they will offer more, private market prices still offer a little extra.
Sell rare or vintage cars: The same applies for rare, rebuilt or vintage cars. Most dealerships won’t be accurately able to price them or resell them once bought so selling privately is still your best option here.
If You Decide to Sell Privately, Avoid These Risks
The vast majority of private car sales are safe, seamless experiences with no risk and no negative outcomes. However, enough private sales go wrong to make it worth highlighting the risks you might face when selling your car. We asked our auto loans team to outline a few of the risks of selling a car privately.
Test pilots and tire kickers: Tire kickers aren’t usually a risk, more a waste of time. But if they use the viewing as an excuse to scope out your property, that’s a different story altogether.
Test pilots on the other hand, can be a risk. If you’re selling a performance or sports car, they are just there to spend an hour driving your car. Perhaps without the skill or experience to handle the power.
Strangers around your home: The majority of tire kickers are just bored and want a little entertainment at your expense. Some are there for more nefarious reasons. To scope out your property, to see what you have in your garage, to look at what security you have around your yard or home.
We might be a sociable nation but we don’t want strangers poking their noses into our business or our home. Especially if they are there for reasons other than buying the car!
Carjacking or theft: Carjackings during test drives are more common in the US rather than Canada but they do happen. That’s why we often recommend taking the keys with you when you switch seats during a test drive.
We also suggest having a friend follow you during the test drive if you’re selling a valuable or desirable car. While the chances of it happening are low, it can still happen so you should mitigate against it.
Payment scams during car sales: There are multiple types of payment scams related to car sales. Fake cheques, fake bankers’ cheques, PayPal money reversals, Western Union scams, credit card scams, fake cash and numerous other risks have to be mitigated against when selling anything.
The safest method of payment right now is bank transfer. You could use a banker’s cheque but would need to go to the buyer’s bank and watch them draw the cheque. The they would need to follow you to deposit it to make sure they are protected too.
Otherwise, use a bank transfer without handing over the keys until you receive cleared funds is the safest way to avoid payment scams.
So, in answer to the original question. Yes, you should trade in your old car to a dealership. In fact, you can just sell it to us for cash if you don’t want a new car.
If you're ready to sell your car in Southern Ontario, we'd love to buy it! simply fill in the form below to get started.