Thursday, March 02, 2006
Trade or Sell Your Car
The much hotter topics usually being about whether to finance or pay cash and to lease or buy are always being discussed, but the topic of whether to sell your car on the private market or trade it in is usually not as popular. Mostly because people automatically assume selling private means more money, but that's not always the case. Based on my experience, I have found that trading in your car has a number of benefits usually forgotten: 1. Convenience. No hassle and worries about advertising and letting people test drive your car. 2. Since the value of the trade in gets deducted pre-tax from the final value of your new car purchase, you save on taxes. This can be substantial especially if your trade in is worth more. On a $10,000.00 trade in, in a state with a 5% tax rate, that means $500.00 in additional saving off taxes. Plus you can finance less, if you choose financing. 3. You don't have to worry about someone coming back to your house demanding money if something goes wrong with the car. Even if you are completely honest and disclose everything, there are occassions where problems do arise. It's nice to know you don't have to worry about it. I should also add one more note, if you sell your car on the private market, some states require you to pay sales tax. I'm not sure how that works, but I believe California might be one of those. CORRECTION: If you buy a car from a private seller, you are responsible to pay tax, in California at least. So disregard that last statement...that's from a buyer's perspective and shouldn't concern your decision to trade or sell.