Trade-in vs. direct sale: that is a question that plagues most (if not all) car owners when it is time to sell your old car. There is no ‘this-over-that’ as both options have their pros and cons to be considered.
In its simplest form of comparison however, trade-in saves you time and hassle while selling lets you make more from the sale. Evaluating the amount of time you have (or are willing) to invest into the sale of your car against the amount you wish you make out of the sale will generally help you err towards one or the other.
The easier of the two options; trading in involves selling your old car and buying a new one from the same car dealer. The price fetched from the sale of your old vehicle will be used to offset the purchase price of the new vehicle. Unless buying a secondhand car, more often than not you will have to top-up for the new car.
It is the option that offers the least fuss in that it saves you time and cost associated with searching for a potential buyer (advertising) and entertaining requests to view and test-drive the car you intend to sell. It is also considered the safest option as all post-sale liabilities are transferred to the car dealer.
These conveniences do come at a price, and that price is a lower return from the sale – justifiable considering the dealer would have to bear all of the aforementioned costs and risks, and factor in profit margins.
The trade-in price a dealer offers is negotiable and should be negotiated, just like you would negotiate the price of the car you plan to purchase.
Direct sale (i.e. selling your car on your own)
Then, there is the direct sale option for those with the time to seek out a buyer (or wait for them to come to you). This route to disposing your vehicle takes significantly more time and effort on your part but offers more headroom for you to negotiate a higher selling price.
The advantages of trade-in are the disadvantages of this option in that everything from preparing the vehicle for sale to managing complaints falls squarely on you to perform. Generally, these are the things you would need to do in a private-party sale:
- Clean and repair
- Determine the car’s current value
- Determining profit margin
- Manage enquiries
- Arrange for viewing and test-drive
- Negotiate on price
- Transfer title and hand over keys
- Manage complaints (if any)
A private-party sale is a tedious process that could take months and is definitely not suited for those looking to quickly flip his or her vehicle. To the sentimentalist however, having control of who is to be the next owner of a once-loved car is an added bonus.
Trade-in vs. private-party sale
Regardless of which option you choose to dispose of your car, it is important to first know how much your car is worth (the market value) to determine how much you can sell it for.
The market value of a car is subject but not limited to its mileage and condition, but generally depreciates with age to approximately 60% of its purchase price after five years.
According to Expat.com, a Toyota Vios 1.5S which retailed for RM88,100 in 2008 will most likely fetch approximately RM53,000 if traded in or higher in a private-party sale arrangement.
Once you have decided on an option, you will need to hone your negotiation skills because that will make a difference in the price you get from selling your car to either the dealer or your prospective buyer.