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Selling a Car: Trade It In or Sell It Yourself?

Selling your current car is probably the first option that comes to mind when it’s time for a new one. However, this is far from your only option. Many car owners forget that they have the choice to trade it in.

While this may not be the most popular option, this may be the best one for many. There are both pros and cons to each way of getting rid of your old car. But don’t worry, we’re here to help you decide which is best for you when considering whether to sell or trade in your old car.

Trading It In

Trading your car in at the dealership is by far the easiest way to get out of your old car and into a new one without much hassle. You can typically do this all in one day, and it’s pretty simple. All you have to do is take your old car to the dealer, the dealer makes you an offer, and you put that money toward buying your new car. It’s that simple.

Once you accept the dealership offer, you can pick out your next vehicle, pay the difference, and ride home in your new car.

While this sounds so blissful, the easiest way isn’t always the best way. While you save time looking for a buyer and handling paperwork, you will almost always get less money back than selling it yourself. This happens because the dealer still needs to profit from your old car, even though you just bought one of theirs.

However, there is a bright spot in all of this. Taxes.

Most states only make you pay taxes on the difference after the trade-in. For example, if you get $10,000 for your trade-in and you’re spending $15,000 on a new car, you only pay taxes on the $5,000 difference — not the full $15,000. The money you save on taxes will probably still not equal the money you lose on not selling, but it does help.

So, if money isn’t a problem and avoiding the hassle while saving time is worth a couple of thousands of dollars, then the trade-in option might be the one for you, even if you still owe money on the car.

TIP: While most states do give trade-in tax credits, a few major states don’t. These states include California, Kentucky, Michigan, and Virginia.

Selling It Yourself

If you are looking to get the most money for your vehicle, this is the right option for you. You will almost certainly get more money from selling your car than trading it in. This is especially true during the ongoing COVID-19 pandemic, where used cars are selling for higher prices due to a chip shortage.

Selling a car on Autotrader also makes it simple. When you list on the site, you will get the following:

  • A free vehicle history report. At a cost savings of up to $35, your vehicle history report will be included.
  • Reach active shoppers. A listing helps you reach millions of active shoppers.
  • More photos and unlimited renewals. Selling on the site gets you dozens of photos, and you pay once upfront until the car sells.

Still, be prepared for drawbacks. Selling your used car yourself takes longer. There’s also no clear timeline.

Other Considerations for Selling a Car Yourself 

  • Collect the car’s paperwork: Before you show a car to prospective buyers, gather all the paperwork for the vehicle, including the maintenance receipts, registration, and title, if you own the car.
  • Meet with buyers: Even during the pandemic, serious buyers want to see a used car in person. For safety reasons, make sure to meet with prospective car buyers in a shopping area or other public location with lots of foot traffic during the day.
  • Be prepared to offer test drives: During the pandemic, allowing test drives can get tricky. If comfortable with a test-drive option, try offering one to the buyer where you and a family member or friend tag along to ensure safety and security for both parties. TIP: Try setting up a test drive at a local car maintenance and repair shop. In this case, you would allow a technician to drive along with the prospective buyer who can take the test drive while the mechanic is checking out the car at the same time.
  • Negotiate with buyers: When negotiating with buyers, know the value of your vehicle and be prepared with the lowest offer you would accept before you begin the process.

Selling a vehicle yourself can be very time-consuming and stressful, but if you’re up for it and want the most money to put toward your new car, this might be the option for you. Read more about selling a car.

If you want to avoid interaction with potential buyers, another easy option is our Instant Cash Offer tool. The online tool is a great alternative to selling the vehicle to a private party, while still making more money than trading it in.

All you need to do is plug your vehicle information into the cash offer tool. With no obligation, you receive instant offers from car dealers in your area. If you like any of them, you can act.

Our Advice

Everybody has different needs when it comes to buying and selling cars. While we understand both options have their pros and cons, the decision depends on the seller. If you are not hard-pressed for money and have a higher value for your time, trading your car in can be an easier option.

On the other hand, if you want the most back for your vehicle, take the time to sell your car on your own so that you have more money to put toward buying a new vehicle. If you can’t find a buyer, you can always go and trade it in and put that toward your new car.

Related Articles on Car Buying and Selling

Editor’s Note: This article has been updated for accuracy since it was originally published. 


How do I Find the Trade-In Value of My Car?

You can find the value of your trade-in vehicle by using the KBB Valuation tool.

Is it Better to Trade or Sell a Car?

This depends on your financial situation and whether if you are looking to buy a new car immediately. If you want to get the most money for your car, it is better to sell it. However, if you are looking to get into a new ride, trading in your vehicle as part of the deal for your new one would be the best idea.

Do You Get More for a Trade-In or Selling?

If you want the most money back for your vehicle, you will make more money by selling it.

Austin Morris
Austin Morris
Austin Morris is an author specializing in editorial writing. He is an avid car enthusiast, and his favorite car is the Tesla. When he is not writing about cars, he can be found watching sports. His favorite sports to watch are basketball, football, and soccer, but he is open to watching any sports games that are on when he is watching tv. Despite being born and raised in Atlanta, he is not a... Read More about Austin Morris

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  1. If the value of your trade in is more than the purchase of the vehicle you are buying does the dealer have to pay you the difference?

  2. I’m trying to see what Kelley Blue Book says about my 84 C4 Corvette what’s 38700 miles on it showroom-ready on the inside Rizal paint 350 Crossfire beauty of a car

  3. I am planning to buy a new car , as of now I owned a Honda Jazz  2006  Miles 11,914 , if I Tradein how much more it cost? Thanks a lot   cp#09158864002

  4. If I trade in my new car for the less value car. And it’s loaned by the bank Who gets the difference ? The bank or myself? 

  5. Do you need to pay income tax on the sale of car to a private party? If so, isn’t it more beneficial to trade in because you pay lower tax for the new car while avoid paying tax on the money you made of the old car?

    •   I think that you only need to pay taxes on the sale of property if you make a profit on it. Seeing as the sale of a car is rarely ever done for more than what you bought it for, There would be no reason to pay taxes on it. 

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