Financially, it's nearly always better to sell your vehicle and then buy. The decision you need to make is, is it worth the time and hassle to sell your vehicle? While it's often possible to make the decision to trade and have the transaction completed the same day, the amount you can get for your vehicle can differ drastically if you sell rather than trade. For example, Pattie sold her 2004 Pontiac Bonneville with over 160,000 miles for around $5,000, and Breck says that as a trade, she would have gotten closer to $4,000. The downside is that it took several weeks on Craigslist in order for it to sell.
One of the factors affecting how long your vehicle can take to sell, and how much it will sell for, is its desirability. Traditionally, trucks sell faster than cars, and for more money. On the other side of that coin, your asking price will affect how fast the vehicle sells more than almost any other factor. Breck puts it like this:
In today's market, so much is about your asking price. A good $4,000 vehicle will sell exponentially faster than a good $14,000 vehicle. Even if the more expensive vehicle is a better deal, the cheaper one is what people can afford.This raises the question of where to set your starting price. Again, NADA or Kelley Blue Book are a good starting point. Conventional wisdom would say to set your starting price high, and let them talk you down. Breck advises against that, however. He says that a starting price should be fair, within about $1,000 of the lowest amount you would take for the vehicle.
As in our previous post about trade in values, the things that will or will not affect your selling price may surprise you. One of the factors you might expect to raise the value of your vehicle when it comes to sell is the original purchase price. Say a new Mercedes sedan is worth $70,000 new, with a medium-sized V6 engine and power options. The original purchase price does not necessarily reflect what someone would be willing to pay for that car from a private seller, versus a mechanically comparable sedan such a Honda Accord with similar features. The Mercedes name and reputation may cause it to be worth more, but as the years and miles go by, the difference in selling price between the Mercedes and the Honda will shrink. Of course, the price you set will be affected by the condition and history of your particular vehicle.
The biggest caveat to using the money from selling your vehicle as a down payment on a new one, is that you do forfeit a sales tax credit. When you trade a vehicle, the amount of the trade is removed from the selling price on the vehicle, and you are only taxed on the remainder. When using the proceeds from a sale as a down payment, tax is applied to the full selling price of the vehicle at 5%. Keep this in mind to make sure that the price for which you sell your vehicle will cover that sales tax difference.
Lastly, if you decide to sell your vehicle privately, we would advise you to not allow yourself to be bullied about the price. While most buyers want the best deal possible on a vehicle, some will try to be unfair about negotiations. Trust your instincts, and stand your ground on that bottom dollar. If all else fails, it is your prerogative to shut the haggling down and wait for another offer.
For more information on the Daniell Motors family, and to find your own vehicle, visit DaniellMotors.com.
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