Why You Should Trade Your Car
If you're deciding whether to trade in your current car or sell, it can be a tough choice. Many buyers prefer the simplicity of trading in their current vehicle at the dealership even though they may not get as much money. It's an easy way to dispose of your current car. Just turn it over to the dealership. Others choose to do the legwork and find an appropriate buyer and get a better price. Here are some tips to help you make the decision.
Why not sell it yourself?
Depending on your credit and income situation, you might not be able to sell your current car until after you buy your new car. So you won't be able to use the money as a down payment. If the old car isn't paid off, you could have an overlap of car payments until you sell it.
Selling your car on your own requires considerable effort, including placing ads, taking phone calls, dealing with strangers, and giving test drives. Most private-sale car buyers will lowball your asking price to a point where it wasn't even talking to them in the first place.
Many experts, websites, and arm-chair-quarterback dealers will tell you that you will get less money than selling it yourself. Well sure, if you are your own salesperson, creating your own terms, how could you not? But did you know that you have to pay taxes to the IRS if you sell your car for more than its worth?
There's a tax advantage with trading in your vehicle. Most states (Including Pennsylvania) charge sales tax only on the difference between the trade-in value and the new-car price. And then you can use the trade-in amount as the down payment on the newer car.
Let’s look at an example
New car purchase price: $30,000
Taxes paid (7% of $30,000): $2,100
Used car sold by owner: $16,000
Total cost of new car: $32,100 – $16,000 = $16,100
New car purchase price – $30,000
Trade-in Value: $15,000
Taxes Paid (7% of $15,000): $1,050
Total cost of new car: $31,050 – 15,000 = $16,050
(In this example, the price of the trade-in is deducted from the price of the new car for tax purposes)
So it is close, numbers-wise. We admit it is not a huge saving, but 50 bucks is 50 bucks. With trading in you not only saved money, but time, time, time, hassle, aggravation, and time.
Ready to trade or sell? Let Fellah Auto Group do the work for you.