Should I Sell or Trade My Car in 2023?

October 17, 2022
2:44 pm

It’s time to say goodbye to your old car. It’s been a good ride, but it’s time for a change. The question is, what to do with it?

Sell, or trade-in?

We often associate selling a car on the private market with a lot of work. Advertising, inquiries, paperwork — those are on your plate. On the flip side, trading your car at the dealership can take the fuss out of getting rid of your car. But it will also take a chunk of the cash.

Today, we’re going to deep dive into the pros and cons of each to help you figure out if it is better to trade in or sell your used car in 2023.

Pros & Cons of Trading in Your Car

At the moment, the combination of soaring new car prices and falling used car prices is, unfortunately, a worst-case scenario for your trade-in. But that doesn’t mean trading your vehicle in at a dealership is not an option.

Pros of Trading In:

Possible reduced taxable sales price

Trading in your car at a dealership may have a tax advantage depending on your state.

When trading in your car, the trade-in value is used to reduce the total amount due before taxes are calculated. This means that trading in your vehicle reduces the total amount due to the dealership and therefore may reduce your sales tax liability.

For example, if you’re looking to buy a car from a car dealership that is valued at $45,000 and the dealer offers $25,000 for your used car, sales tax will only be calculated on the remaining $20,000 balance due. Say the sales tax rate in your state is 5%, the original price for the new car would normally generate $2250 in sales tax. After trade-in, the sales taxable amount is only $20,000 and the sales tax due would drop to just $1000. That’s a drop of $1250, which is much better in your pocket than the tax office. Not all states offer sales tax credits though and they’re not always available, so check with your state DMV office to verify availability.

Less Hassle

Selling a used car privately nowadays can be a daunting task. You need to study the local market to set the proper sale pricing, put together all the required paperwork, make sure it’s in a sellable condition, clean it up and then find the right place to sell it online.

By going to a dealership, you can bypass these tasks. They will inspect your car and take it off your hands right away. You’ll get less money for it, but once the deal is done there’s nothing for you to worry about!

Can do it all at one dealership

Selling your vehicle privately may mean visiting multiple websites and spending time researching and preparing your vehicle for sale. If you trade it in, you may be able to get it all done in one trip! Simply drive your old car to the dealership, complete a marathon of paperwork and drive away with your new vehicle.

Sounds great, right? Well, trading your vehicle in to a dealership is almost never that simple. It’s important to note the downside of trading in your car.

Cons of Trading In:

Dealerships make profits on used cars

Car buying fees are determined based on several different variables, just as insurance rates are. If one thing is for certain, however, it’s that used cars come with less expensive fees compared to their shiny new counterparts.

This is especially true when it comes to sales tax since tax is based on the purchase price.

Dealers may give you a low offer

Not all dealerships sell every make and model used vehicle, so they tend to not make aggressive offers to buy vehicles that they wouldn’t normally stock. This means that you could own a perfectly good used Honda, but receive an uncompetitive offer from another dealership brand. This situation is very common and most likely ends with an unhappy customer and the vehicle being sold privately.

Selling your car on your own

If you choose to go it alone and sell your car privately, you’re in the drivers seat. The benefits include:

You may be able to charge a higher selling price

When selling on the private market, you are responsible for setting the price. Sure, you need to advertise a reasonable price based on the current value of your car, but if you believe your car is in better condition than others or has better features than most, you can charge that little bit extra. We reccommend using sites like Kelley Blue Book to find your cars value.

You walk away with more money

When selling privately, you cut out the middlemen and eliminate the dealer’s profit, dealer fees and other costs. Cutting out this waste means more money in your pocket.

No pressure

Selling on your own means there are no external pressures. You can sell at your own pace and set your own timeline. There’s also no one pushing you to decide on a deal that may leave you less well off than you hoped for.

But, it can be time consuming

There’s a lot of time and effort involved in selling a used car. Even through third-party websites it can be tough to get your car in front of the right customer. Third party sites are not on your side in this transaction. They’re paid for by car dealerships to promote their inventory and your used car gets lost in the mix. You’ll need to juggle multiple selling websites, handle all the phone calls, deal with time wasters, etc.

What if there was a middle ground?

Wouldn’t it be great if you could get a fair price for your used car without giving money to a dealer or pulling your hair out?

Meet Motobyo.

Motobyo is a peer-to-peer marketplace for buying and selling used vehicles. Our platform takes the complexity out of private used car sales. We eliminate the waste in today’s current system and put more money in your pocket. You have the option to get cash for your used car today with our Quick Cash Offer feature or you can list it on our platform to sell privately to maximize your return. It’s up to you!