Selling your car: dealership versus privately

There are only a few main options when it comes to selling your car – the most popular being to sell privately, or to sell through a car dealership. So when you need to decide between the two, what’s the difference, and which option will offer you the most value?  

How much is your car actually worth?

The first place to start is to research the value of your current car so you know roughly how much it is worth.

There are plenty of websites that will give you a free valuation online such as carsales.com.au. Visit their free car valuation page and enter your car’s make, model, year, badge and description and it will provide you with a price guide based on both selling your car privately and through a dealership.

For instance, according to carsales.com.au (at time of writing), a 2012 Mazda 3 Neo with automatic transmission will sell for between $15,800 to $17,900 privately and between $12,300 to $14,400 if sold as a trade-in to a dealership. That’s up to $5600 extra if you chose to sell the vehicle privately.

Of course, the only way dealerships can make a profit on your trade-in is by buying it for less than they can sell it, otherwise it’s not worth their time or money to take the car off your hands, fix any damage, detail it and sell it on for you. So it’s highly unlikely you could get the same price selling a car to a dealer as you would selling a car privately.

So, why would you trade-in your car when you could possibly pocket thousands more by selling it privately?

Privately

Private car sales can be costly and can take many months to sell – and that’s where the convenience of trading in a car comes into play.  There are a few things to mull over before deciding to sell your car privately.

Firstly, you need organise advertising for your car. Will you pay for an ad on a car sales website, post it to social media or put up a sign in your car and hope for the best? If you decide to advertise, that will come at a cost – the total of which will depend on how long your car takes to sell.

Secondly, how soon do you need a new car and how much time do you have to email, talk to and meet with potential buyers? You may be lucky to find a buyer who’s happy with the price, condition, kilometres and location of your car immediately, but it’s more likely to take a little bit of time to sell.

And lastly, you will have to compete with extremely competitive new car sales. The CommSec Car Affordability index stated that new car affordability is the best it’s been in 38-years. In fact, it’s the best levels they’ve seen since the 1970s. With new cars so reasonably priced, it can be a hard slog trying to sell a used car when consumers can pay a few extra thousand for a brand new one.

So be prepared, you may think this is the most cost effective way – and it very well could be – but understand also, that it could cost you a lot of your personal time to sell your car privately.

Dealership trade-in

Car dealerships offer convenience because you can sell, buy, finance and fit your new car with accessories – all in one place.

And while you may not get as much money for your current car than if you sold it privately, you have to remember – everything is negotiable. If the dealership is offering you less for your trade than you reasonably wanted, see if you can negotiate elsewhere to gain that money back. Start by negotiating on the price of the trade and then ask them if they can give you a further discount on your new car.

According to a recent Deloitte report, it estimated that car dealerships main profits are made from parts and servicing, which were well ahead of the profits recorded for new or used car sales. So don’t overlook negotiations here – as this could make up for your trade-in loss. Negotiate with your dealer on car loan finance options, car servicing and extras such as tint, satellite navigation or floor mats.

Whether you decide to sell your car privately or trade it in for a new one – make sure you have done your research. Once you’ve made your decision, you can start to look forward to the next one – which is deciding how much you can afford for a new car!

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