Shopping for a new vehicle is a major financial decision, and one of the biggest things you will have to worry about is what to do with your old car. The two primary options for selling are trade-in or private sale. There is no one right answer that will satisfy everyone’s needs, but below are a few factors that may influence your decision before obtaining an auto loan.
Pros of Trading in Your Vehicle
- Trading in your vehicle does not require you to spend any time or money on advertising. Dealers base the value of your vehicle on two primary factors: auction value and true market value from an outside source such as Kelley Blue Book or NADA.
- Dealers will even take cars that are in less-than-ideal condition, albeit at a lower value. Just as with a private sale, it’s important to restore your car as much as possible and to research its value before trade-in.
Cons of Trading in Your Vehicle
- Trading in your vehicle at the dealership involves not only negotiating the value of your used car, but also the cost of a new vehicle. Keeping track of two negotiations at once can easily become overwhelming, as a dealer may try to offset any losses on a high trade-in value with a high sale price on the new car.
- If you are unfamiliar with auto loan terminology, you could easily end up paying hundreds of dollars in interest for the promise of a few extra dollars upfront. With the right resources, a car shopper can often make slightly more money off of a private sale.