Sell Your Used Car: You'll Be Well-Paid for Your Time if You Avoid a Trade-In
Jerry Edgerton
Buying a new car? How would you like to wind up with an extra $1,000 to $2,000? No, we're not talking big rebates here. By selling your recent-model used car yourself, you could profit that much vs. what you are likely to get for that car as a trade-in.
There are only three good reasons to trade in your car. Two of them are convenience and convenience. Avoiding hassle is the biggest reason why more than half of new-car buyers trade in their old ones. The other reason to consider a trade-in is if you live in a state where the sales tax on the new car is only on the net amount after the trade-in. Thus, with a 10% tax, you'd pay $2,000 on a $20,000 new car but only $1,000 in tax after a $10,000 trade-in. (Check the Web site of your state tax agency or department of motor vehicles, which likely will spell out the practice in your state).
Then compare the tax savings of trading in vs. what you stand to gain by selling it yourself (see "Find out what it's worth" below). Selling used cars is the dealer's biggest profit center--with retail prices generally 15% to 20% over the trade-in value. If you get what seems like a strong trade-in, you probably are paying too much for your new car on the other end of the deal.
Selling your used car yourself simplifies that new car deal and usually is worth the hassle. For instance, a 2000 model Ford Explorer XLT would bring in an estimated $9,550 on a trade-in and $11,580 in a private party sale, according to Kelley Blue Book. That's a difference of $2,030. A similar comparison on a 2000 Toyota Camry--the best-selling sedan in the U.S.--shows a $1,410 advantage in selling it yourself. We'll spell out ways you can speed up the process and cut down on that hassle--including how to organize and advertise the sale, how to handle potential buyers, and how to close the deal. Here's a step-by-step plan: Accept only cash or a certified credit union/bank check as payment.
Find out what it's worth
Online sites can help you set a fair price. Go first to Kelley Blue Book. You can fill in the year and description of your car, including the exact options and current mileage. Don't exaggerate when describing the condition; most used cars are in "good," not "excellent," condition. If you are aiming for the Kelley price, set your initial asking price $200 to $300 above that number, but not too high. Setting the price too high only will keep your car from selling. The buyer probably looked at the Web sites too. Double check the Kelley Blue Book values with a competing site, Edmunds.com. (In addition to trade-in value and private party sale, these auto price sites will give a third number for dealer's retail value; that price is not a realistic goal for most vehicles.)
Get your documents in order
In addition to title and papers regarding your loan, if any--documents you must have to sell the car--organize other records as well. Retrieve any receipts you have showing when you did oil changes and other maintenance, as well as any repair work. Such records boost a buyer's confidence in the condition of your car. Also pay $14.99 to get a CARFAX report on your car. This will show, if true, that you have been the only owner. Or if there were past owners, it will show the mileage when the title changed hands--bolstering your claim of an honest count on the mileage. Also keep the printouts from the used car price sites. If a potential buyer disputes your price as too high, you can show the printouts.Don't exaggerate when describing the condition.
Get the car in good condition
If there are any cracked windows or other visible defects, get them fixed. Also fix any scratches or other blemishes that you can do relatively cheaply at a body shop. Change the oil and make sure transmission and other fluids are at the proper levels. Consider spending $100 or so to have the car professionally detailed. That squeaky-clean look will help with buyers. (You should think about detailing even if you are trading in--professional buyers at dealerships are not immune to cars that look their best).
Put your ad in print and online
Different buyers may have different shopping habits, so to reach them all put your ad in both the local newspaper and in an online forum. For less than $100, you can do both. Autotrader.com, the largest online used-car site, charges $55 for an ad that runs until your car sells. Yahoo! Autos charges $24.95 for a 21-day basic ad or $34.95 for an ad with more features and two free extensions of the 21-day period. Newspapers charge $35 to $50 for a five-line ad that runs from two weeks to a month. Make your car sound good, but don't exaggerate. Don't suggest it's in perfect condition if it's not. Note any especially attractive equipment, such as a multi-CD changer or sunroof.Selling used cars is the dealer's biggest profit center.
Decide how to handle potential buyers
Ask all callers how they plan to pay for the car. Do they have the cash? Do they need to get a loan? This will help you tell right away which buyers are potentially serious. You may feel uncomfortable having strangers come to your home to see the car. Pick an easy-to-find spot nearby--such as a public park or a section of a mall parking lot. When you have a buyer who sounds serious, arrange to meet there.
Be careful with the close
Once you have a deal, accept only cash or a certified credit union/bank check as payment. Have the buyer meet you at your credit union to deposit the money before you hand over the keys.
And remember: That money in your account is more than you would have made with a trade-in.
Jerry Edgerton is an automotive writer whose work has appeared in Money and other national magazines. He also is the author of the book "Car Shopping Made Easy."
Published September 1, 2003
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