5 good reasons to give your vehicle in exchange… or not

Buying a new vehicle, whether new or used, can be exciting for some or a source of stress for others. Unless it's your first purchase or you're coming out of a lease, you'll inevitably ask yourself: should I trade in my current vehicle or try to sell it myself?

There are advantages and disadvantages to each option, of course. Here, we'll focus on the first option.

To begin with, you should be aware that the amount you receive will be less than the market value of the vehicle simply because the dealer or merchant will have to resell it and will want to make a profit. Many buyers don't understand this reality and feel like they're being taken advantage of.

It's also important to remember that the profit margin will be eroded by all the repairs and tasks that need to be done to prepare your vehicle for sale. The mechanical condition is rarely taken into account in the appraisal, but the dealer must protect itself against breakdowns or problems that will only become apparent after the sale is completed.

5 good reasons to trade in your vehicle

Now that we've covered that, let's look at some of the reasons to trade in your vehicle:

1. You avoid the tedious and sometimes costly work of selling your vehicle yourself: inspection, cleaning, fixing cosmetic and mechanical issues, advertising, meeting with potential buyers, watching out for scammers, etc.

2. You let the dealer take care of all the paperwork, and your trade-in vehicle doesn't need to be in perfect condition, as the staff will take care of any necessary repairs.

3. You can leave the dealership today with your new car if you trade in your vehicle, whereas if you sell to a private buyer, you don't know how long you'll have to wait before the transaction is completed.

4. You will reduce the applicable taxes. For example, if a new car costs $50,000 and you receive $20,000 in exchange for your old one, you will only pay sales tax on the remaining $30,000. However, keep in mind that this savings could be offset by the difference between this amount and what you could have gotten for your car if you had sold it yourself.

5. You have the option of including the “balloon payment” on your trade-in car in your new loan. This way, your old creditor is repaid by the new one, and you can drive a newer vehicle for a few dollars more per month. While this solution may seem convenient at first glance, it is not without risk. It could cause you to lose money in the long run and affect your credit rating.

Good reflection!