Buying a used car almost always means selling one, too-your own. If you're shopping at a dealer, trading-in your present car as part of the transaction is certainly the easiest strategy, but is it always the smartest? And what if you're negotiating a private-party sale where a dealer is not involved? MSN Autos looks at three ways of getting rid of your present car. By comparing them, you should find one that works best for you.

Trading In Your Car
Trading in your old car is the easiest way to cope. In fact, because even dealers of used cars generally want your trade-in, they make the procedure as easy as possible. Trading in a car is usually a same-day transaction with minimal fuss and bother. The dealer assesses the condition of your car, its age, and other factors and determines its trade-in value. You can bargain over the trade-in value if you like, or simply accept the dealer's value. In the end, the amount the dealer gives you for your trade-in is deducted from the amount you pay for your new vehicle.

Trade-in value is generally lower than the amount you could sell the car for yourself in a private-party sale, but by trading in you avoid significant pitfalls. You save time, effort and potential post-sale headaches. As Donna Reichle, spokeswoman for the National Automobile Dealers Association, explained, "If you sell your car yourself you are basically making yourself available to the buyer. When you trade in your car to a dealer you absolve yourself of liability."

Trading in is about convenience-there are no advertisements to place, no test drives to arrange, and no legal battles to fight if your recently-sold car breaks down. For those people without the time or inclination to sell a car on their own, trading in makes sense. Once a car is in the dealer's hands, it's the dealer's responsibility to prepare it and handle the resale.

Of course, for those efforts and responsibilities a dealer is justified in setting a suggested retail value on the vehicle that is higher than the trade-in value. The higher price covers refurbishing, marketing costs, "and, frankly, dealer profit," said Reichle. "The next person buying the car gets the advantages the dealer has put into it," she added.

Trading-in may also offer a tax advantage if you are buying a vehicle at the same time. In most states, according to dealers and regional authorities contacted by MSN Autos, when your car is taken in trade you only pay sales tax on the difference in cost between its trade-in value and the price of the new car. For example, if a dealer gives you $10,000 on your trade-in and the purchase price of the car you are buying is $25,000, you'll only be required to pay sales tax on the $15,000 difference between the two amounts. In states with a high sales tax, this benefit can help narrow the difference between trade-in value and private party price.

Selling Your Car Yourself

Selling a car on your own is good insurance that you'll obtain top dollar, and it may be your only option if you are buying your next vehicle through a private-party sale. But be aware of the work involved. Prepping your vehicle for sale will take time, and depending on its condition may also cost you some money. Honestly assess the car's condition, and then decide how much you want to spend on minor repairs, always remembering the liability involved with a private-party sale. Be sure to fix things well enough to avoid running into possible legal troubles farther down the road.

Once the vehicle has been cleaned and repaired, you'll need to determine what it's worth. All of the dealers interviewed by MSN Autos suggested using Kelley Blue Book values as a starting point. By looking at both the trade-in and suggested retail values listed by Kelley for your car, you can determine an asking price somewhere between them. Also check your local newspaper's classifieds, and newsstand publications containing used-car ads in order to determine local market pricing. Look for listings of vehicles similar to yours and compare their asking prices. Using multiple sources helps assure that you arrive at a fair and realistic asking price.

The next step is to advertise and field phone calls. Since most private party vehicles are sold through local classifieds or used-car publications, start by placing ads in those but be prepared to advertise in multiple sources. Remember to calculate the costs involved. If the car doesn't sell right away, make sure you can afford to run ads for an extended period of time if necessary.

After the ads have been placed, remember to set aside time to answer phone calls and meet interested parties for test drives. Prepare yourself for possible scheduling hassles like multiple buyers wanting to see the car at the same time, and for negotiating in general. How low a price will you really accept? How will you handle competing offers and other dilemmas?

When you finally find a buyer and have the money in hand, the last step is to transfer the title and registration, and cancel your insurance on the vehicle.

Selling Your Car on Consignment
A third, relatively trouble-free way to sell your car is through dealer consignment. In this scenario, the dealer typically handles the sale of your car in exchange for a service fee and/or a 6-10 percent commission on the eventual sale of the vehicle. It's then their responsibility to detail, display, and sell your vehicle for a price you determine. This arrangement frees you from the day to day hassles of selling the car on your own and almost always nets a higher value than simply trading it in.

However, consignment is not for everyone. Only select dealerships even accept vehicles for sale on consignment. Most prefer to take cars in on trade. Those that do are usually specialty dealerships targeting buyers of specialty vehicles such as sports cars, luxury cars and classics. So if you've got an aging Taurus, consider trading or selling on your own. If on the other hand, you've got a classic Ferrari or Porsche, consignment could save you from the ordeal of selling it yourself.

Donating Your Car to Charity
Another way to get rid of your used car is to donate it to charity. An attractive alternative to many people just on principle, some also find the greatest advantage of donating a car is the ease with which it takes off their hands a low-value, hard-to-sell vehicle.

MSN Autos

© 2009 Microsoft

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