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Pros and Cons of Trading In Your Car

By: StaffPublished September 6, 2021

The Pros Of Trading In Your Car

Right off the bat, there are a number of advantages to trading in your car, including:

It's Easy Trading in requires minimal effort. You drive it to the car lot. Sign a few papers. And the trade-in amount is used as a down payment.

Tax Incentives While this can vary depending on the state you live, many areas only require you to pay tax on the difference between your trade-in and the car you are buying. Compare this to selling the vehicle yourself, where you’ll pay tax when selling the old car as well as when buying the new car.

It's A Guarantee When selling your car yourself, it may take months before you receive a single offer. On the other hand, a trade-in is a sure thing, and you can get a guaranteed quote and offer before you even set foot in a dealership, saving you time and hassle.

The Cons Of Trading In Your Car

The major drawback when it comes to trading in your car is money. Simply put, your vehicle is only worth what the dealer is willing to give you, and there is little room for negotiation. Factors that affect trade-in-value include:

The Profit Margin The dealer needs to sell your trade-in and make a profit. This means they are only going to offer you the wholesale price, which is hundreds, if not thousands, of dollars lower than retail market value.

Supply and Demand As with any kind of transaction, the laws of supply and demand apply. For instance, if the dealer already has ten Nissan Altimas on their lot, they are probably not going to offer anything close to fair market value for another.

Selling your car yourself may result in netting hundreds, if not thousands of more dollars. However, it is important to note that this endeavor means encountering several more risks and headaches. When choosing to sell your car, items you need to consider include:

  • Placing Classified Ads
  • Cleaning and Detailing
  • Conducting Minor Repairs
  • Supplying Documentation, like a Vehicle History Report
  • Potential Buyer Fraud

In the end, you must ask yourself what is right for you. Are you willing to sacrifice convenience for a larger profit?


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