Should You Sell or Should You Trade?

Automobiles are one of the few things in life you can sell
yourself or trade in when you decide to upgrade. After all, when was
the last time your local appliance store gave you a few bucks for your
old washing machine when you bought a new one?

So what's the best way to get rid of your old car: sell it
yourself or settle for a dealer trade-in? It depends on what your
vehicle has to offer and the payoff you want.

"Trade-in is prepackaged food. It's not as good as homemade,
but it is convenient," says Mark Perleberg, lead auto expert with
NADAguides.com. (NADA stands for the National Automobile Dealer
Association.)

"Selling it yourself is like a home-cooked meal. It takes
more effort."

That extra effort, however, can boost your profit.

The case for selling

Selling your old car takes more time and know-how, but you can
potentially get more money than when trading it in.

That's because you cut out the middleman, the dealer who must
spend money to advertise and spruce up your car before he resells it at
a profit. The dealer considers those costs before arriving at the
amount he'll give you for your old auto.

A dealer's cut of the profit is what prompts many car owners
to opt for self-selling. But remember, you're then going to face many
of the same issues as the car dealer.

If your vehicle is older or in less-than-pristine shape,
you'll probably have to get it detailed to make it attractive to
buyers. You might even have to spend money on repairs.

You also have to consider your time investment in marketing
the vehicle and showing it to prospective buyers -- probably on
weekends or evenings.

If you do decide to sell, realistically assess your auto's
marketability. Charlie Vogelheim, executive editor of the automobile
price guide Kelley Blue Book, notes that selling a Toyota, a popular
brand, is a lot easier than trying to market a Daewoo.

Location also comes into marketing play. A two-wheel drive
sports utility vehicle might sell quickly in Florida, but will be
shunned in harsher climes where four-wheel drive is a winter-driving
necessity. Sales appeal can even extend to color. "White, silver and
black are popular colors," Vogelheim says. "Purple is not."

When your car does sell, you'll have to orchestrate payment.
No personal checks, please, but what about a cashier's check from the
buyer? How about monthly payments?

"You have to decide what type of payment you'll accept, which
adds to what some people might call the hassle part [of selling a
car]," says Vogelheim.

Another hassle is the paperwork you'll need to complete to
ensure that ownership is transferred correctly. Do you have the title?
Do you know what your state requires when a car is sold to another
consumer?

On the plus side, there is a plethora of Web
sites that can help you sell your auto, from asking price
information to downloadable "for sale" signs for your auto's windows.
Some even help you sell online by posting your auto's specifics for a
period. There is a fee for the cyber-selling service; it varies by
site, but generally is based upon how much info you want posted and for
how long.

"Selling your car online reduces the amount of time and the
energy it takes to sell it yourself," says Chris Long, product manager
of cars.com, one site that offers the service.

Talking trade-in

On the other side is the vehicle trade-in route. The biggest
appeal here is that it's quick and relatively hassle-free. Plus, it
could cut your out-of-pocket costs on your next car.

"The value of the vehicle can be immediately applied to the
new car price," Kelley Blue Book's Vogelheim says. "The car can become
the down payment and there's no waiting for funds or the need to
establish a relationship with a new buyer."

Trade-ins usually are called for when your car is showing its
age, with lots of miles, a rusted and dented chassis, and the tendency
for routine maintenance to turn into expensive repairs. It may not be
worth much as a trade-in, but the amount that you'll have to sink into
it so it will sell may be too high for the effort.

My husband and I personally learned this lesson not too long
ago when we traded in our 1995 Ford Explorer. The SUV had close to
150,000 miles on it, most of them from regularly traveling seven miles
up a nasty gravel road. It was to the point that our mechanic, after
replacing the drive shaft, begged us to get rid of the Explorer. Nice
guy that he is, he was tired of seeing us sink more money into a car
rolling ever closer to the auto graveyard.

We couldn't in good conscience sell it to anyone in our small
town, even if they still wanted it after learning of its road record.
More to the point, it just wasn't worth much. So we took the dealer's
$1,000 -- a third of the listed book value for a mint-condition model.

We were happy to replace our old auto and get even a little
back on it. But the experience underscored what most car owners view as
the biggest drawback to trading in a car: You'll probably get less
money than if you sell it yourself.

"It depends on the car and its condition, but you may stand
to make $1,000 to $2,000 more if you sell it yourself," says Clark
Wood, vice president of autotrader.com.

But that's not always the case.

"You can sometimes make more when you trade it in if there's
a motivation for the dealer to do what we call in the industry
'stepping up to the trade,'" says NADA's Perleberg.

He was a dealer for 18 years and used to offer more for
trade-ins if he had a long-standing relationship with the seller, who
also was a subsequent buyer of a new car from his dealership. Perleberg
would also offer top dollar if the car was an exceptional value and had
high marketability for his area.

Finally, remember that depreciation will affect the car's
ultimate price regardless of whether you trade it in or sell it
yourself. Vehicles depreciate quickly, so it might be wise to dispose
of it before it isn't worth much in the eyes of a dealer or an
individual buyer.

The bottom line: If you have a demanding job, aren't a
natural salesperson or hate dealing with details, trading in your auto
may be the better choice. But if you like the challenge of doing it
yourself and don't mind some extra work for extra money, then selling
your car may be a better bet.

Jenny C. McCune is a contributing editor based in
Montana.

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