A car is one of the most important investment decisions you can make. One great way to ease the financial toll of purchasing a new car is to trade in your current vehicle. This can make your life easier by getting rid of your old car, and it can also provide some financial benefits. Here are 6 advantages of trading in your car.
1. Tax Advantages
Many states only require sales tax on the purchase price minus the trade-in value of the old car, which means you don’t pay the full tax on the new vehicle when you do it this way. However, if you sell your old car without trading it into the dealer, this tax benefit often does not apply. This means that a trade-in is more likely to provide a tax benefit.
Another reason why many consumers choose the trade-in option is that it eliminates the time and hassle of selling a car via classified ads and other means. For some people, the time savings involved has a greater financial value than the difference between the trade-in value and the average sale price through other means. Also, there are many predatory buyers who prey on private sellers by convincing them to sell far below market value.
3. Increased Financing Options
Most people who buy a new car need to have some kind of payment plan in order to afford the purchase. There are many options for financing a car in today’s market, and car dealerships often provide more flexibility and easier terms when the customer is able to trade in a vehicle as part of the transaction. When trading in your old car, the amount that you have to finance is reduced, and this can also reduce the total interest and number of payments that you might have to make.
4. Better Deals
Auto dealers are motivated to acquire inventory for their business, so a trade-in can often provide leverage to negotiate for a lower price than you would get without having a vehicle for trade. It’s often advantageous to ask if the dealer is willing to negotiate a price lower than the one they originally asked for.
5. Save Money on Detailing
If you’re thinking of selling your car privately, it’s usually necessary to have the car interior detailed and to fix any minor aesthetic flaws. These procedures can cost hundreds of dollars. When you trade in your car, the dealer already expects to perform these steps, so the cost of this would not fall on you.
6. Mitigate Outstanding Payments
If you’re still making payments on your old car, it’s still possible to trade it in for a new one without having to continue the payments on the old one. In a private sale, buyers are often dissuaded when they realize that they will have to make payments. Dealers can incorporate your current loan payments into the new financing arrangement.
If you fret about the idea of buying a new car and want to sell your old one, these 6 advantages should help steer you in the right direction. You’re likely to benefit from a trade-in rather than trying to sell your vehicle on your own.