When it’s time for a new set of wheels, should you trade in your old car or sell it privately? The answer depends on the resources available to you and why you’ve decided to sell. Answering these questions can help shed some light on the best solution for you.

1.  Is your current car…

  • a popular model?
  • equipped with the features buyers want?
  • in excellent condition?
  • showing low mileage?

The more of these questions you can answer “yes” to, the easier it will be to privately sell your car. 

2. Have you had the vehicle maintained regularly and do you have all the receipts?

In private transactions, vehicles are sold “as is,” so buyers want evidence that they’ve been well-maintained. If you’re the original owner and have good records, you may be able to get more money by selling it yourself.

3. Do you have temporary alternate transportation?

If you sell your old car before buying a new one, you can use the proceeds for a down payment, but that can leave you without a car for a time. On the other hand, if you trade in your car, you can drive your old car to the dealership and drive home with your new one. Seamless!

4. Will your finances allow you to buy a new car before selling the old one?

If living without a car for a while is too difficult, maybe you have savings that you could use for the new car’s down payment and then replenish when you sell your old car. If not, trading in your car may make more sense.

5. Do you have the time, temperament and cash needed to sell a car?

It may take weeks—even months—to sell your car, and until it sells, you may keep spending to advertise it. Plus, potential buyers may want to see it at a moment’s notice, so you have to keep it very clean. It helps to have a flexible schedule, too, to meet with potential buyers and ride along for test drives. With a trade-in, you just clean it up once and take it to the dealership—all on your schedule.

6. Are you good with paperwork?

If you trade in your car, the dealer will process all the paperwork required for title transfer and registration. In a private sale, you’ll need to visit your state’s department of motor vehicles (DMV).

7. Is it important that you get top dollar for your car?

You can almost always get more for your vehicle by selling it yourself, and it can be a significant difference. For example, the Kelley Blue Book suggests that a three-year-old, full-size truck in very good condition might sell for $14,058 to a private party but fetch only $12,299 as a trade-in. That is a difference of $1,759. Important caveat: In most states, sales tax is calculated on the difference between the trade-in value of the old car and the purchase price of the new one. So if you get $10,000 for your trade-in and spend $15,000 on a new car, you only pay taxes on the $5,000 difference, not the full $15,000. That can make a trade-in a better deal than you might expect.

Navy Federal Credit Union’s auto buying resources can help you meet your transportation needs!