Right now, it’s a buyers’ market in the world of automobiles. The industry disruptions mean that there are fewer new vehicles being made, and that means prices for used cars have shot through the roof. Depending on the model and condition, if you decide to sell your car today, you might even get more money than you originally paid for it! However, selling a car is not quite that straightforward as there are a variety of different options you can choose from. Each way of selling your car has its own advantages and disadvantages, so decide carefully before you put your car on the market.
Private Sales – High Risk and High Reward
Back in the day, selling a used car privately meant putting a “for sale by owner” sign in the window and maybe taking out a classified ad in the local newspaper. Today, things are both easier and more complicated. Online marketplaces like Craigslist and Facebook Marketplace allow you to advertise your used car far and wide. Done properly, selling your used car will get you the maximum possible profit. However, this option is also filled with pitfalls that you need to be prepared for.
First, selling a car yourself will take time and effort. If you think you can simply put up an online ad and find a buyer offering full price within hours, prepare for disappointment. Even in the current market where used cars are in incredibly high demand, finding a serious buyer willing to offer what your car is worth can take weeks, if not months. This means that if you need cash now, this is not the option for you.
Second, you have to actually know what your car is worth. On the surface, KBB and other online tools make it easy to value your car. In practice, putting a price tag on a car is an art that requires sound knowledge of your vehicle and the market, as well as some good haggling skills. Nine times out of ten, you are not going to be paid whatever you are asking for in the ad (if you do get a bunch of offers to pay the asking price, odds are you massively underestimated what your car is worth). But when potential buyers start trying to talk down the price, you have to know when they raise valid points and when they are trying to pull the wool over your eyes.
Third, understand that private sales attract everyone from the ignorant to the criminal, and you have to deal with them. From wishful thinkers trying to barter unwanted goods to scammers trying to swindle you, selling valuable items can put a lot of stress on you. Even after you find an upright buyer willing to offer you a fair price, you will still need to handle the legal side of issues and make sure all the paperwork is properly completed so that the police don’t end up knocking on your door over unpaid parking tickets or worse racked up by your car’s new owner.
Sell to a Dealership – Low Risk, Low Reward
Most people take one look at all the potential pitfalls of a private sale and turn to their local car dealer instead. While you will never get as much money from a dealer as you will on the open market (the dealer has to make money somewhere in the transaction afterall or they won’t stay in business long), you will be getting cash up front, and you will have someone experienced to help you through all the legal paperwork you need to sign. For the average driver who doesn’t have much experience with selling cars, this is the safest and most obvious solution to selling your car. However, there are a few things you might not know about selling to a dealership.
First, many people don’t realize that a dealership will generally buy your car even if you aren’t buying anything from them. While most sales to dealers happen when someone trades in their current vehicle for a new model, that doesn’t have to be the case. If you are looking for some quick cash and have a car you don’t need any more, just call up some local dealers and see how much they are willing to offer for it. If it’s something that they can sell, they will probably give you some pretty competitive offers for it – especially since dealers are searching high and low for anything they can put on their lots right now.
Second, if you are looking to sell your car and upgrade to something new, selling to a dealer comes with some extra benefits. The most important of these is that in nearly every state, the dealer can deduct the value of your trade-in from the value of your new car when calculating sales tax. For instance, if you have a trade-in worth $25,000 and you are buying a car worth $40,000, you will only need to pay sales tax on the $15,000 difference. This can save you thousands of dollars in sales taxes (and remember – if you sell a car any other way, you will also by paying income taxes on whatever profits you make).
Third, if you have a used car that you are still paying on, selling to a dealer may be your only option. When you take out a loan on a car, the bank technically owns your vehicle until you pay off the loan. And no, you can’t sell the car and then use the money to pay the bank unless you manage to find a buyer willing to pay you upfront and wait until the bank sends you the title (probably not happening unless you are selling to family). However, dealerships have a lot of cash on hand and some special rules that allow them to pay off loans directly when they buy a car. This allows you to sell a car that you still owe on legally and without any hassles.
Consider Your Options, Then Reap the Rewards
While selling a car might be more complicated than you thought, tens of millions of used cars are sold every year, and the process isn’t that difficult. Opting to sell to a dealership is the easiest route, especially if you are trading in your old car for something new. However, while private sales are more difficult, they offer the potential for a bigger payoff if you play your cards right. There are also a variety of non-traditional options out there, including several online car sales sites that will offer you cash up front for your old cars – think of these as halfway between selling to a dealership and selling on your own.
With so many different options available, it pays to do your research and consider how much time and effort you are willing to invest in selling your car. Also, consider how much your car is worth – newer models will be in higher demand from dealerships, while older vehicles will be easier to sell privately because of their lower prices. After you have figured out which course you want to take, get ready to figure out how you want to spend all the extra money that comes from selling your car!