6 Benefits of Trading Your Car into a Dealership

Buying cars are cyclical events in life. When you’re ready for a new vehicle you’re tasked with letting go of your current car. The decision has to be made with what to do with it. Do you save it for a family member? Do you list it yourself and work the sale through social media or other car buying channels? Or do you turn it over to experts at a dealership in a trade when you’re buying that next vehicle?

From a dealership’s point of view, there are six specific benefits to trading your used car in when you upgrade. Consider this list when you’re making the decision yourself.

1. Tax Savings

One of the biggest factors in a new car buying decision is budget - and rightfully so. Behind the costs associated with home buying, financing a vehicle is one of the biggest financial decisions in people’s lives. The biggest benefit to trading a car in as you purchase your next is the cost of tax savings and potential reduction of the amount you need to finance.

Most states - including Minnesota - require sales tax to be paid only on the difference between price of trade-ins and the price of the next vehicle purchased, not the full price of the car itself. For example:

If you buy a car that’s $20,000 and your trade-in value is $10,000, the amount you’ll be taxed on is the $10,000 difference. As a general estimate, consumers pay a state sales tax of 6.5 percent - in this example, that would be $650 tax for the difference, vs. paying on the full sticker price, or $1,300 without the trade in.

2. Hassle-Free

Convenience is a close second to tax savings when you go through a dealership. It’s a simple fact that most buyers prefer to trade in current vehicles as they’re preparing to purchase another one because the entire process is easy and familiar. All there is to it, essentially, is handing over the keys, cleaning out the console, signing paperwork, and driving away. Well, that might be oversimplifying things, but you get the point.

How you determine the car’s fair resale value? Which pricing guide or website are you ultimately going to trust since they all differ? What strategies do you have for listing or promoting your car?

3. Avoid Scams on Craigslist

You’re likely familiar with some of the bad press that online sites like Craigslist and other social selling pages have when it comes to car transactions. There’s been a whole bunch of reports and articles on how to be smart about listing your vehicle online that invites the chance for fraud, delays, or even harm. The best way to avoid headaches and scams is completely avoid that avenue of selling your car altogether - trust it to a dealership.

4. Save Your Sunday

If there’s one thing people are in shortage of these days, it’s time. Selling your car outright takes time and dedication to seeing it through to the legitimate sale. It used to be that people reserved showing their cars for sale at home on Sundays - or weekends in general. Now, social media makes it easier to communicate and facilitate such events over lunch hours, before work, and even into the evening hours. Managing those showings and bartering back and forth takes precious time.

5. The Insurance Interim

The world of rules and regulations of vehicle insurance is a far and wide one. SImply deciding to pull the insurance on the car you’re selling in order to transfer the policy to your next or new vehicle isn’t going to cut it. Cancelling your policy on a vehicle still in your possession is illegal, actually. What happens if you don’t sell the car in a decent time frame? You’re obligated to keep insurance current which adds costs until you completely transfer ownership at point of sale.

And just because you sold your car to a private buyer and transferred all the necessary things like the title doesn’t mean the new buyer will actually follow through on those details. There are plenty of details and potential headaches associated with that, too.

6. The Toll of Reconditioning

Just as you wouldn’t list your home for sale without doing minor (or major!) touch-ups and deep cleans to make it more presentable to the market, you wouldn’t list your car for sale without vacuuming out the interior and making the exterior equally as clean would you? Giving your available car a good reconditioning needs to happen to make it as appealing as it could possibly be - all the while maintaining that level of presentation over time. It can be especially difficult to uphold its sheen and shine if you’re still driving your car, it’s parked outside, or it’s a less than desirable time of year, weather-wise.

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