If you’re looking to get the absolute most value out of your car when the time comes to upgrade, you’ll generally get a higher price by selling it out of hand than trading it in at a dealer, but this isn’t always the best option.
Dealerships offer sellers a trade-in amount that is aligned with the book value, or M&M value, of the vehicle which is generally between 10-15% lower than the retail value, in other words, the price at which it will resell the car to another person, according to information sourced from Motus.Cars.
In contrast, selling a car privately could net the owner that extra 15% if they have shrewd negotiation skills, though this course of action comes with its fair share of caveats.
The good and the bad of selling your car
When submitting your vehicle for a trade-in on a new one, dealerships consider various factors such as the condition, mileage, service history, mechanical warranty, popularity of the model, and the seller’s next intended purchase.
If you’re selling to the dealership with no intention of buying again, it will consider the M&M trade value, costs of reconditioning, and the expected time to resell, which could result in a higher or lower price than the trade-in value.
The benefits of opting to sell or trade your vehicle to a business are that it is generally quicker both during the sale and new-car acquisition processes, payment is guaranteed, and documentation is handled professionally.
Additionally, dealerships perform administrative tasks such as change of ownership, and they are responsible for conducting checks on the vehicle, so if any issues are missed, they are accountable for resolving them.
The only downside of going this route is the lower figure the dealership will provide for your car.
At the other end of the spectrum, the main draw of a private sale is the potential to get maximum value, but it’s up to the current owner to decide whether the pros outweigh the cons.
Just finding a buyer can take a considerable amount of time, meeting them in person can pose a security threat, and sellers always run the risk of not receiving payment as scammers are rife on the pre-owned market.
If the deal does go through, the change of ownership can be problematic as the seller remains liable for outstanding licensing fees and fines that must be paid before the transfer can be completed.
Financing a private purchase is also more challenging, so it’s less attractive for buyers to purchase a car from a private individual.
Where to go from here
If you are in the market to find a new set of wheels and let go of your old one, do your homework and don’t sell to the first dealership you visit.
Motus.Cars suggest engaging “with various buyer service providers to gauge the value of your car. Then, negotiate with the dealer where you plan to purchase your new car and see if they can offer a better deal with a stronger trade-in value unless their initial offer exceeds the offers received from buying service providers.”
This way, you can be confident you’re getting good value.
If you’re dead set on selling privately in an effort to get the highest price for your car, only consult and do business with someone you know well and completely trust.
It is, however, essential to be open and honest about the vehicle’s condition and history with them, as you will be held accountable if any issues arise.
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