Should I Trade In My Car to A Dealer or Do a Private Sale?

3 minutes can save you hundreds. Enter your postal code below and join thousands of Canadians saving on insurance.

Secure. No Spam. No Fees.

Why You Can Trust MyChoice

MyChoice serves as an independent intermediary between you, financial institutions and licensed professionals without any additional charge to our users. In the interest of transparency, we disclose that we partner with some of the providers we write about – we also list many financial services without any financial gain. MyChoice does not operate a financial institution or brokerage and to ensure accuracy, our content is reviewed by licensed professionals. Our unique position means that we hold no recurring stake in your policy, ensuring our mission to help Canadians make better financial decisions is free of bias or discrimination. 

Article Contents
Picture of By <span>Aren Mirzaian</span>
By Aren Mirzaian

Updated on July 17, 2023

Visit author page
Picture of By <span>Aren Mirzaian</span>
By Aren Mirzaian

Updated July 17, 2023

Visit author page

4 minute read

Article Contents
private v dealership

More than likely your first car won’t be your last, the time will come when you want to upgrade for whatever the reason. Perhaps your family has grown and you require a little more space in your vehicle or you’re just looking to sell and not replace. Maybe you need a different type of vehicle for specific job, like a van or a truck. Or in the worst case you’ve probably used your current car so much that maintenance costs make it unfeasible to keep it.

So when it is time to sell your car theres a couple of avenues that you will want to explore, for the most part it’ll be whether to do a private sale or sell your car to a dealer.

You might be wondering, which option is the best. Well, the answer will depend on each specific case and their relevant circumstances, both have pros and cons. Within this article we will examine the distinctions of each so that you can decide how best to sell your vehicle.

The first thing to do, regardless of how you want to sell your car, is to make quick google search to determine how much you can expect to make on the sale. There are thousands of used vehicles sites online that you can easily check to find your model to get an idea of the current market value. Knowing how much you expect to make from your sale will help you decide what to list your price for and how much you’re willing to negotiate.

Should I Trade in My Car to a Dealership?

Usually, selling to a dealer will result in an amount that would be slightly less than selling privately. Dealerships want to make money on the vehicles they buy, so they may offer you a price that is lower than the market value. After all, the dealer is only interested in your vehicle if they can profit from it when it is sold to the next owner.

Trading in your vehicle at a dealership may be more convenient, but it may come at a cost. Working with a dealer can speed up the selling process because established dealerships can get a deal done quickly.

The dealer will first determine whether your car is eligible for a trade; sometimes you can trade in your vehicle with a different manufacturer, but this is not always possible. The buyer agent at the dealership will inspect your car and determine its trade-in value based on its condition, how easily, and how much they believe the car can be sold for. Keep in mind that you can try your hand and negotiate with dealers, if they give you a price right away, there’s probably some room to negotiate, especially if you plan on trading in your car for one from the dealer’s inventory.

This is the main reason why this option is so convenient; you can combine the trade-in value of your previous car into your next vehicle purchase. If you choose to finance your next car, the dealer will also give you a fair discount. So, if there’s a car at the dealership that you’d like to trade in for, it can be favorable to trade in your previous vehicle.

Finally, there is also a tax benefit when you trade in your car to a dealership in Ontario. They are subject to a 13% sales tax (HST), but only on the cash difference between your trade-in vehicle and the vehicle you purchase.

For example, if you purchased a $60,000 vehicle from a car dealership and received a $30,000 trade-in credit for your vehicle, you’d pay HST on just $30,000. That would add up to $3,900, while HST on the entire $60,000 would be $7,800, so this is something worth considering on how you can save some money.

Should I Consider a Private Car Sale?

The most appealing factor of choosing a private sale over a dealership is that you can most likely make more money, but you’ll have to make the extra effort for it as well. This is because you’re going to have to wait for the offers to come in when selling directly to the final customer rather than a dealership who can offer you something instantly.

In order to increase the likelihood of quickly selling your car you should post a description and photos that make the car look and sound appealing. This includes providing a detailed overview, clear photos, the car’s value, any upgrades or features it might have, for example winter tires. Include highlights, such as an extended warranty or newly installed parts.

The obvious disadvantage to a private sale is that it will take more time and effort compared to using a dealer. You also must take responsibility for all the paperwork and details in relation to selling and the transfer ownership process. You’ll need to schedule appointments with potential buyers and negotiate the price. Finally, you could end up wasting hours talking to people who aren’t serious buyers and just end up giving you low ball offers.

If you’re selling your car privately, make a list of its maintenance history and be open about any problems it may have. A dealership will most likely figure these details out on their own, but a private buyer will want as much information as possible up front. Having that information — and sharing it — will make the transaction go much more smoothly.

The contractual and legal processes are also your responsibility (which a dealership takes care of when you sell to them). In Ontario, you must obtain a used vehicle information package, and a buyer may request a safety certificate.

However, if you’re willing to put in the extra effort, you’ll most likely be rewarded financially buy selling privately instead of using a dealer.

What is Best for Me? The Dealer or a Private Sale?

Both methods of selling a car have benefits and drawbacks as discussed above. Calculate how much you want to earn and how much time you’re willing to put into the sale to determine which route is best for you. At the end, everyone wants to feel like they won when selling or buying a car, and for some, that means trading in to a dealership and for others, it means selling privately. Consider the pros and cons of each option carefully to determine the best move for you.

Congratulations! You made it to the end!

Now, here is the easy part: complete your quote in under 2 minutes

Discover More About

New Brunswick has updated its penalties for impaired drivers. Find out what changes were made and what it means to your car insurance premiums.
Your auto insurance rates may change every year. Read our article to learn when you should be checking for cheaper auto insurance rates.
Getting your car impounded is frustrating and even worse if you don’t know what you’re doing. Click through for a guide to releasing your impounded car in Canada.

Even More Ways To Save