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Pros and Cons of Selling Your Car to a Private Party

When it comes time to sell your vehicle, which option is better? Selling it to a private party or trading-in/selling to a dealer?

There's one huge advantage to selling the car yourself: An extra $1,000 to $2,000 in your pocket - even if the car isn't worth very much.

By selling it yourself, you'll be able to get retail price (or slightly below) whereas if you sell it to a dealer, you'll only get wholesale value. The price difference is usually 10 - 20%.

If your car is an older model or has more than 100,000 miles, the case is even stronger to sell it privately. Most dealers aren't excited about buying these vehicles and usually wholesale them to another dealer or sell it at auction for a quick, easy profit.

It seems like it's a no-brainer to sell your car privately, but there's a long list of disadvantages you need to consider.

First of all, you're going to have to invest a lot more time selling the car yourself. You'll need to create a classified ad, post to several different sites, answer emails and phone calls, and worst - arrange appointments for prospects to check out the vehicle. Oftentimes, people cancel or don't show up.

It can take several weeks to sell the vehicle, but sometimes you do get lucky and find a buyer right away - especially if you price attractively compared to other vehicles on the market.

Another disadvantage is the hassle of having to deal with payments, DMV paperwork, and the possibility of fraud during the transaction.

Many sellers - particularly women, are concerned about having strangers come by to test drive the vehicle. Although the crime rate is very low and there are things you can do to minimize it, there's still a chance that something bad could happen and some people don't feel comfortable with that.

In most states, selling your car privately will prevent you from getting a trade-in tax credit. This is only a disadvantage if you're in the market to buy a replacement vehicle at the same time. The trade-in tax credit can only be applied if you buy and sell a car in one transaction at a dealership.

On a $10,000 trade-in, the tax credit can be worth up to $1,000 depending on your local tax rates.

Finally, if you sell a car that breaks down right away, you could be dealing with some big headaches. Although they may not have a strong case, that doesn't stop many buyers from taking legal action.

In the end, you need to weigh these pros and cons and see if an extra $1,000 to $2,000 is worth the extra effort. If saving money is your top priority, then we feel it's definitely worth selling the car yourself, but if convenience and safety is at the top of your list, selling to a dealer is probably you're best option.

My Recommendation for Car Shoppers

TrueCar No-Haggle and Edmunds Price Promise are the quickest way to see the lowest car prices in your area. These sites show you no-haggle prices from dealers closest to you - and the deals are usually really good. This should be the first step you take when negotiating your car price. Follow this up with my checklist to make sure you squeeze out every last bit of savings.
- Gregg Fidan

Gregg Fidan

About: Gregg Fidan


Gregg Fidan + is the founder of RealCarTips. After being ripped off on his first car purchase, he devoted several years to figuring out the best ways to avoid scams and negotiate the best car deals. He has written hundreds of articles on the subject of car buying and taught thousands of car shoppers how to get the best deals.

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