Originally Posted by JimKW
The way to get the best deal is to sell your car yourself. I have used AutoTrader many times to sell cars. When you go to buy a new (or used car) you will get a much better deal when you do not have a trade in.
Yes, generally speaking you will often be able to sell a car privately for more money than a dealer will give even if they're giving a fair trade value vs. lowballing you. "Much better deal" is pretty subjective though, and to be fair one must consider all the aspects not just the dollar signs. In my experience it is easier to do private sale on lower value cars, possibly because shoppers of $5,000 cars seem more likely to go to private sellers than shoppers of $30,000 cars.
When you sell your car yourself:
- What will you drive if you sell your car before buying the new one? What if what you want to buy is an uncommon configuration?
- Say you buy the new one first; how will you fund the downpayment, or will you take a larger loan out and pay down the principle when you sell your car? A higher loan amount has potential implications on your credit reports; not the end of the world, but be aware if you might be buying a house in a year or two. Might also be tricky if you still have a loan on your current car.
- What are the Sales Tax implications in your state? In Georgia, you pay tax on the *difference* between your trade and the price of what you buy (new or used), meaning your trade gets you a reduction in sales tax owed on the new (to you) car. At 8% sales tax and a $20,000 trade in, you'd have to get $21,600 selling your car yourself just to break even on the sales tax difference. Other states may be different.
- Do you still have a loan on your old car? How will you structure the sale to get the title released from the lender and into the buyer's hands? Obviously it's much easier if your old car is paid off and you have the title.
- Does your insurance cover you when a potential buyer is test-driving the car? I've seen policies which don't.
- How will you handle payment such that you're sure you have valid funds? Money orders and cahiers checks can both be forged. Cash can be checked with a counterfeit pen of course, but $20,000 in cash is a lot of bills.
- Are you up on the various scams people try to pull on private sales? Most common is the "I'm out of state and want this car, so I'll send a cashiers check and have a car shipper pick it up from you". Another is one or two show up in person and fast talk you into not riding along; they'll just have you hold the keys to the car they arrived in... which turns out to be stolen when they never come back.
- Do you have time to deal with buyer questions and the lookie-lou's on your days off? Especially the no-shows.
- Do you have the temperment to deal with the opportunistic low-ballers who are looking for distressed sellers? The worst of them seem like they're fine with the price, come do a test drive, are all ready to buy it then start picking it apart dinging you for every last little nick or scratch or dust spot, ultimately making a lowball offer.
I'm NOT saying not to sell your car privately. It can make a lot of sense as Eric335 mentions above, though $10k suggests Porche dealer was really lowballing the trade. When I was shopping for my BMW, I had one BMW dealer lowball my trade and another basically hit KBB trade. Negotiate trade just like you negotiate price.
Either way, know what you're getting into and realistically evaluate two choices.