When it comes time to get rid of your old car, you might wonder: "Should I sell my car to a dealer or privately?" Selling privately is more likely to net you the best price. At the same time, the convenience and speed of selling to a dealer might also be your top priorities. If you're hoping to sell your car, using a dealer can be a great option, so here's what to know about selling your car to a dealer.
Selling Your Car to a Dealer
- Pros and Cons of Selling to a Dealer
- Determine the Vehicle's Value
- Steps to Take Before You Sell Your Car
- FAQ
Pros and Cons of Selling to a Dealer
Are you noticing signs it's time to sell your car? Here are some advantages and drawbacks to selling your vehicle to a dealership:
Pros
- Convenience. When you're selling to a dealership, the dealer handles the paperwork. That means you won't have to tackle that task, which can make things more convenient for you.
- Safety. When selling to a private party, you have to set up test drives with strangers you may have met via Autotrader or Craigslist, which puts you in a potentially dangerous situation. And if you make a sale, the best payment method is cash, which means you'll have to worry about making it home safely from the location with all that cash on your person. A dealership is generally a trusted location and you can complete your transaction without safety concerns.
- Speed. Selling to a dealership is also quicker than listing a car online or in a local newspaper. You won't have to sit around waiting, fielding multiple phone calls or emails, only to find out that the buyer is just kicking the tires. Dealers either will or won't buy your car, and they will typically let you know one way or the other on the spot.
- Tax savings. If you're purchasing a vehicle from the dealer you're selling to, many states will deduct the sale price of your car from the cost of the one you're buying when calculating sales tax on your new ride. So, for example, if you're selling a vehicle to a dealer for $10,000 and purchasing one for $30,000, you'd only pay sales tax on the remaining $20,000.
Cons
- Smaller payout. Selling your car privately will generally net you more money than choosing to sell it to a dealership. Dealers handle all the hard parts of the transaction while making it fast and easy to get money for your old car. In exchange, they expect to make a good profit on the deal. After all, dealers are in business to make money, so they aren't inclined to provide those services for free. Since you're selling a car instead of buying, the only way for them to extract money from the transaction is by paying you less for your used car. The car dealer takes on the hassle of car buying, and in return, you get a little less for your trade-in.
Determine the Vehicle's Value
When you research your car's value online, you will likely be presented with three numbers:
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The first is a value for private party sales. This figure is the market value you can reasonably expect when selling to an individual.
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The second is a trade-in value. This value is what a car dealership will pay you when you purchase a new car and want to use the old one as a down payment.
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Finally, depending on the platform you use, you may also see what is known as an instant cash offer. This figure is a dollar amount that a car buying service will pay you on the spot for your car, usually without a test drive or inspection. For example, CarGurus' instant cash offer tool will source the best offer from our network of thousands of dealers in mere seconds based on the information you enter into the form. It's possible to sell your car without even leaving your home. These cash offers are valid for seven days (or 250 miles of driving, whichever comes first). If you like the offer, you'll be able to schedule a time for vehicle pick-up, and then you'll get paid.
Private Party Sales
Private party sales are when you sell to an individual and handle the entire process yourself. The general rule is that selling a car this way can be difficult. However, private party sales are typically the most lucrative way to sell your car, so this is an excellent way to get top dollar. However, on the flip side of that coin, selling to an individual usually involves haggling, so you should be prepared to name your price and stick to it. For more information, read our guide to selling your car privately.
Trade-In
If you want to sell your car to help pay for a new vehicle, trading in can be your best bet.
A dealership can apply the trade-in value to a new purchase when you trade in a car. This step can lower your out-of-pocket purchase expenses up front and will ultimately lower your monthly payment. You may also get a better interest rate if you're financing since the down payment reduces your loan amount.
However, trade-ins are generally not the most profitable route for the seller, as dealerships aren't known for paying the best prices for used vehicles.
Instant Cash Offers
When you're ready to sell and don't want to deal with the hassle of a private sale or lowball trade-in offers from a dealership, instant cash offers (ICOs) are your friend, allowing you to sell your car online easily.
Companies like Edmunds, CarMax, Kelley Blue Book, Autotrader, and many more offer ICO services. Other companies, such as Carvana and Vroom, operate exclusively in this space. When using any of these companies and their ICO service, you can expect to have your car picked up and receive a check if you agree to a deal.
CarGurus has partnered with CarOffer to provide these services. You can visit the "Sell My Car" page on the CarGurus website for more information. Instant cash offers typically fall between a trade-in value and what you could expect through a private party sale.
Steps to Take Before You Sell Your Car
Whether you're selling to a dealer or a private party, here are some steps to take as you prepare to sell your vehicle:
1. Gather the relevant paperwork. Locate the car's title, because you'll need to hand the vehicle title over to the new owner. Also, prepare a bill of sale and a release of liability form for the buyer to sign, absolving you of responsibility for things that could go wrong with the vehicle in the future. Maintenance records and a vehicle history report provide insight that may appeal to buyers, so gather those documents. In addition, if your car is still under warranty, locate the warranty paperwork; a vehicle still under warranty will be more attractive to buyers.
2. Consult your state's Department of Motor Vehicles (DMV). What's required of a seller during a car sale varies from state to state. For example, in some states, the seller keeps the license plates when a vehicle is sold, while in others, the plates are returned to the DMV or they remain on the vehicle. In addition, some states require you to give the new owner smog certification when selling a vehicle. Visit your state's DMV site to learn more about the rules governing a car sale.
3. List important details. Write down your car's make, model, trim, and odometer reading. If you plan to post a vehicle listing, you'll need to include these. If your car has optional or aftermarket equipment, list those features as well. Locate the original sales paperwork (if you still have it) since it will include this information.
4. Get the car ready for sale. Remove personal items, and clean the exterior and interior. First impressions matter in the sales process, so ensure your vehicle looks its best.
FAQ
How do I sell my car to a dealership for the most money?
Shopping around is essential if you want to sell your current car to a dealership for the most money. The payout may vary from dealer to dealer, so visit more than one to improve your chances for getting a great deal. One fast and easy solution is to sell your car 100% online with CarGurus. Our instant cash offer service leverages a network of thousands of dealerships to return the best cash offer, and it only takes a few minutes.
Does it make sense to fix a car before selling?
If the cost of repairs exceeds the value of your car, it doesn't make sense to fix your vehicle before selling. If the repairs cost significantly less than your car's value, fixing your car may make it more appealing to buyers. However, you'll need to decide if it's worth the hassle.
What should you know before selling your car?
Before selling your car, know you have options. You could sell privately, sell or trade it to a dealer, or sell it online via an instant cash offer. And what if you've leased your car? You can sell a leased car to a private buyer or a dealership.
How honest should you be when selling a car?
You must be honest when selling a car. If you sell to a private party, and you're dishonest about the car's condition or problems, they could sue you if they learn you've been deceptive during the sales process.