Trade-in vs private sale: which gets you more for your car?

Trade-in: the easy route

• Fast. You can often be done in an afternoon.
• Simple. The dealer handles the paperwork.
• May reduce your sales tax. In many states you only pay tax on the difference between the new car's price and your trade-in value. Check your state's rules.
• Usually pays less. A dealer has to recondition and resell the car at a profit, so offers are below what a private buyer might pay.

Private sale: more money, more work

• Usually brings more. You are selling directly to the person who will drive it.
• Takes time. You need photos, an honest ad, replies to messages, test drives and negotiation.
• Needs care. You have to meet strangers safely and handle payment and the title transfer correctly.
• No tax credit. Without a trade-in, you do not get a trade-in tax benefit where it exists.

A way to compare

Get a trade-in offer from at least two dealers. Then look at what similar cars are listed for in your area, and estimate what a private sale could bring. Subtract your costs and the value of your time, and the sales tax advantage of a trade-in, if you have one. If the extra from selling privately is small, the easy route can win.

Before either

• Clean the car inside and out; it is worth the effort.
• Gather the service records, both keys and the title or loan payoff information.
• Fix small, cheap problems and ignore expensive ones.
• Be honest about the condition.

Know your loan payoff

If you still owe money on the car, find out the payoff amount from your lender. If the car is worth less than you owe, you are in negative equity, and you will need to cover the difference. A dealer can roll it into a new loan, but that increases what you borrow.

If you sell privately

See how to sell your car privately for the steps, and used car scams to avoid to stay safe.

Common questions