Whether you sell your car privately or to a car dealership largely depends on how much you want to sell it for and how much time and effort you’re willing to put in. Each option has its pros and cons – private sales typically have higher profits, while trade-ins can be more convenient.
Determining the Value of Your Car
Before you can even decide on the best way to sell your car, you first have to find out how much it’s worth. This will help you determine what sale price to list and how much you’re willing to negotiate.
The “fair market value” is how much a buyer would pay and how much a seller would accept for the car, assuming that both know about the vehicle and used car market.
Some of the factors that can impact your car’s fair market value are its:
- Make and model
- Age
- Safety rating
- Mileage driven
- Condition and necessary repairs
- History (e.g., collisions, accidents)
- Market demand
If you’re unsure of your car’s value, you can check used vehicle websites for a better picture.
Private Car Sale
The biggest benefit of selling your car privately is that you have more control over the entire process. This means you can decide on the sale price and get more money than if you traded it in.
However, the trade-off is that you have to handle the advertising, buyer inquiries, test drives, and paperwork to transfer ownership on your own. If you’re selling privately, make sure to provide all the details (including and especially any upgrades you’ve made, such as winter tires) and photos that show off the vehicle.
Keep in mind that if you haven’t paid off the loan on your car, private buyers may be hesitant to purchase from you. Plus, they may have trouble getting financing from a bank or lender if there is an existing loan.
Dealership Trade
Working with an established dealership will often speed up the sale, making it much more convenient for sellers who want to be more hands-off. They’ll take care of everything from start to finish – you just need to bring your car in.
But because dealers want to make a profit on selling your car, they’ll quote you a price lower than its market value. The dealership will take into consideration factors like its condition and how easily they think they can sell it to determine its trade-in value. That said, they may pay more than you think for modern or top-selling vehicles.
You can negotiate with the buyer at the dealership, especially if you plan to trade your car in for one from the dealer’s inventory. Alternatively, if you finance your next vehicle with the dealer, they may give you a discount. They’ll work with you even if your title isn’t free and clear, as they can just roll your existing loan into the next one. Getting a new car is entirely optional – most dealerships will be happy to buy your car either way.
However, if a deal seems too good to be true, it might just be. Some dealerships may try to make their money back from you by adding non-negotiable markups to the purchase of the new vehicle.
One plus side when you trade a vehicle into a dealership is that you can subtract the value of your vehicle from the purchase price of the car you’re trying to buy. This is applied before the 13% sales tax (HST), which means you don’t have to pay tax on the full value of the new vehicle.
Let’s say that the trade-in value for your car is $25,000 and you want to buy a $50,000 vehicle from the same dealership. If you sold the car privately, you’d pay $6,500 in taxes. In contrast, if you traded it in, you’d pay only $3,250 in taxes.
Should You Sell Your Car or Trade It In?
Go through the lists below and check ONE statement you agree with the most for each row. While this is just a guide and the decision is ultimately yours, this can help you understand whether selling privately or trading in your car is the better choice for you.
| Private Sale | Trade-in |
|---|---|
| My priority is to make the most money out of the sale. | My priority is to sell and sell fast, even for a lower price. |
| I want more control over the selling process and to set my own asking price. I’m willing to put in the effort to advertise and negotiate with buyers myself. | I’m willing to be a little more hands-off in exchange for more convenience and simplicity. |
| My car is not completely paid off. | My car is completely paid off, and the title is clear. |
How to Get the Best Value for Your Vehicle
No matter how you choose to sell your car, there are a few things you can do to maximize your profits:
- Clean your car thoroughly, inside and out. If you can, have both the interior and exterior detailed. Staging your car can help you make a better impression and negotiate a higher price.
- Repair any issues (e.g., dents, cracks, chips) and make any improvements before listing the car for sale. The optimal time to do major repairs is when the car hits 50,000-65,000 kilometres, as wear-and-tear after this point will quickly depreciate your vehicle.
- Be honest about the condition and history of the vehicle. Experienced buyers and dealerships will figure it out either way, and private buyers deserve accurate information. This encourages a much smoother transaction.
- Collect any records that prove your ownership and the condition of the car, such as the title and registration, all copies of the keys, maintenance reports, receipts, and the Used Vehicle Information Package (UVIP).
- Set a floor price or the lowest you’re willing to go. Don’t be afraid to shop around for other buyers or dealerships if you don’t like the deal.
Key Advice From MyChoice
- Check online marketplaces and used car websites to find out how much your car is worth. This will give you some leg to stand on when negotiating with buyers or dealers.
- To choose between selling your car on your own or to a dealership, think about what your #1 priority is. A private sale could get you more money if you’re willing to put in the effort, but trading is easier, more convenient, and comes with some tax advantages.