Should You Trade In Your Vehicle?

When you’re in the market for a new set of wheels and searching for the perfect new or used vehicle, chances are you’ll be visiting many local dealerships to find it.  Once you’ve finally selected which one you’re interested in buying, you’ll need to decide if you plan on trading in your current vehicle or if you are interested in selling it yourself.  While many people’s automatic reaction is to try and sell it privately it’s not a bad idea to look at the both the Pros & Cons of trading in your current vehicle before you make your final decision.

Benefits To Trading In Your Vehicle

• Convenience – There’s no doubt about it, the biggest reason why so many people choose to trade in their current vehicle to the dealership they are purchasing from versus selling it themselves is because of the sheer convenience of it all.  Selling a vehicle isn’t easy but certainly trading one in is!  It’s simple… you drive in, turn over the keys and viola you’re done.  No posting it online, parking it on a busy road, screening phone calls with people who may or may not be interested or having to meet with prospective buyers.  Simply agree on a trade in value with the dealer, hand over the title, sign some paperwork and you are done!

• Time – Along with the convenience of trading in a vehicle is the draw of saving time. When you factor in the time to get a vehicle prepped for sale, fix any issues necessary, post ads, park it for sale, take calls, meet for test drives and haggle out a sale, it’s not hard to see how some decide the lower trade in price is worth it.  In addition, in the time it takes to sell the vehicle privately, it must be insured which costs you additional money every day.

• Built In Downpayment – When you hand over the title and those keys to your salesman, you’ve immediately created a downpayment on the vehicle you are interested in purchasing.  No waiting until you sell the vehicle to a private buyer which may take days, weeks or even months, you’ve got it right now when you need it most.  And while some may come prepared with a downpayment in hand, trading in your current one adds even more to the cash you’ll be putting down.

• Trade In Tax Credit – Trading in your vehicle can save you money on the sales tax you’ll pay to the state that selling independently does not allow and this year there’s even more allowed!  Beginning January 1, 2018 in Michigan, car buyers will be afforded a sales tax trade-in credit amount for vehicles delivered on or after January 1 for the price agreed to by the dealer and purchaser for the trade-in vehicle, not to exceed $4,000.  That means no sales tax on up to $4000 depending on your trade in value and the purchase price of your vehicle!  So let’s say for example you are buying a used 2017 Hyundai Santa Fe Sport AWD for $18,997 and the dealership has agreed to give you $4500 for your trade in, you’ll only have to pay taxes on $14,997 which is a difference of $240!  Not too shabby.

• Financed Vehicles Accepted – Whether people still owe money on the vehicle they are currently driving or even upside down in it (owing more than it is worth), one benefit of trading in the vehicle is that a dealership will still take it while it’s difficult to sell a vehicle when you technically do not own it.

Drawbacks To Trading In Your Vehicle

• Less Money – While it’s not always true, individual sellers do typically receive a higher asking price from private buyers than from trading it into a dealership.  This is because a private seller does not need to necessarily make any repairs to get the vehicle into good running order, provide a warranty or need to turn a profit on it in order to stay in business.

• Decide Quickly – Unlike taking as much time as you’d like to sell it privately to an individual, a dealership will need a final answer to their top trade in dollar before your new purchase has been finalized.  If you have the time and don’t mind the hassle of selling it yourself, this might persuade you to take your chances on selling it to an individual.

• Not Unique – Most dealerships are usually interested in most trade ins but if they currently have too many of your type of vehicle or even that specific make and model, they may not be interested in extending you an offer for your trade in.  Of if they do, it might be a minimal amount.  Knowing what they already have in their inventory before you step onto the dealership may help you decide beforehand whether you would like to sell it yourself or not.

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