Automobiles are one of the few things in life you can sellyourself or trade in when you decide to upgrade. After all, when wasthe last time your local appliance store gave you a few bucks for yourold washing machine when you bought a new one?
So what's the best way to get rid of your old car: sell ityourself or settle for a dealer trade-in? It depends on what yourvehicle 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 withNADAguides.com. (NADA stands for the National Automobile DealerAssociation.)
"Selling it yourself is like a home-cooked meal. It takesmore 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 canpotentially get more money than when trading it in.
That's because you cut out the middleman, the dealer who mustspend money to advertise and spruce up your car before he resells it ata profit. The dealer considers those costs before arriving at theamount he'll give you for your old auto.
A dealer's cut of the profit is what prompts many car ownersto opt for self-selling. But remember, you're then going to face manyof 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 tobuyers. You might even have to spend money on repairs. You also have to consider your time investment in marketingthe vehicle and showing it to prospective buyers -- probably onweekends or evenings. If you do decide to sell, realistically assess your auto'smarketability. Charlie Vogelheim, executive editor of the automobileprice guide Kelley Blue Book, notes that selling a Toyota, a popularbrand, is a lot easier than trying to market a Daewoo. Location also comes into marketing play. A two-wheel drivesports utility vehicle might sell quickly in Florida, but will beshunned in harsher climes where four-wheel drive is a winter-drivingnecessity. Sales appeal can even extend to color. "White, silver andblack 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 thebuyer? How about monthly payments? "You have to decide what type of payment you'll accept, whichadds to what some people might call the hassle part [of selling acar]," says Vogelheim. Another hassle is the paperwork you'll need to complete toensure that ownership is transferred correctly. Do you have the title?Do you know what your state requires when a car is sold to anotherconsumer?
On the plus side, there is a plethora of Websites that can help you sell your auto, from asking priceinformation to downloadable "for sale" signs for your auto's windows.Some even help you sell online by posting your auto's specifics for aperiod. There is a fee for the cyber-selling service; it varies bysite, but generally is based upon how much info you want posted and forhow long. "Selling your car online reduces the amount of time and theenergy it takes to sell it yourself," says Chris Long, product managerof cars.com, one site that offers the service. Talking trade-inOn the other side is the vehicle trade-in route. The biggestappeal here is that it's quick and relatively hassle-free. Plus, itcould cut your out-of-pocket costs on your next car. "The value of the vehicle can be immediately applied to thenew car price," Kelley Blue Book's Vogelheim says. "The car can becomethe down payment and there's no waiting for funds or the need toestablish a relationship with a new buyer." Trade-ins usually are called for when your car is showing itsage, with lots of miles, a rusted and dented chassis, and the tendencyfor routine maintenance to turn into expensive repairs. It may not beworth much as a trade-in, but the amount that you'll have to sink intoit so it will sell may be too high for the effort.
My husband and I personally learned this lesson not too longago when we traded in our 1995 Ford Explorer. The SUV had close to150,000 miles on it, most of them from regularly traveling seven milesup a nasty gravel road. It was to the point that our mechanic, afterreplacing the drive shaft, begged us to get rid of the Explorer. Niceguy that he is, he was tired of seeing us sink more money into a carrolling ever closer to the auto graveyard. We couldn't in good conscience sell it to anyone in our smalltown, 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 littleback on it. But the experience underscored what most car owners view asthe biggest drawback to trading in a car: You'll probably get lessmoney than if you sell it yourself. "It depends on the car and its condition, but you may standto make $1,000 to $2,000 more if you sell it yourself," says ClarkWood, vice president of autotrader.com. But that's not always the case. "You can sometimes make more when you trade it in if there'sa 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 fortrade-ins if he had a long-standing relationship with the seller, whoalso was a subsequent buyer of a new car from his dealership. Perlebergwould also offer top dollar if the car was an exceptional value and hadhigh marketability for his area. Finally, remember that depreciation will affect the car'sultimate price regardless of whether you trade it in or sell ityourself. Vehicles depreciate quickly, so it might be wise to disposeof it before it isn't worth much in the eyes of a dealer or anindividual buyer. The bottom line: If you have a demanding job, aren't anatural salesperson or hate dealing with details, trading in your automay be the better choice. But if you like the challenge of doing ityourself and don't mind some extra work for extra money, then sellingyour car may be a better bet. Jenny C. McCune is a contributing editor based inMontana. Bankrate.comis the Web's leading aggregator of information on financial productsincluding mortgages, credit cards, new and used automobile loans, moneymarket accounts, certificates of deposit, checking and ATM fees, homeequity loans and online banking fees. Visit Bankrate.comto get the tools and information that can help you make the bestfinancial decisions.
Source: Money & Work
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