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Is it worth it to sell or trade your vehicle?

LORRAINE SOMMERFELD

In a hot used car market, do you trade in your car or sell it? Auto sales is one industry that has recovered fairly well from a year of this disastrous pandemic, but it definitely happened with a changed environment.

There have been upsides: dealers know that people making an appointment to come in are more likely to buy than kick tires; buyers are doing even more research ahead of time and narrowing down decisions.

There have been downsides: global supply chains have been disrupted, meaning inventory has been adversely affected and buyers might feel pressured into taking what they can get. But if you have a used car you’re looking to unload, this might be a golden time for you.

Used car prices have never been higher. The gap has been closing over the past couple of years, with the difference between the cost of newer used and new being so slight, you’re usually better off buying new. But if your usual approach has been to toss the keys of your old ride to the dealer as you pick up your new one, you might want to hesitate. While you can usually get more for your car than what a dealer is offering you, there are still some things to consider.

George Iny is president of the Automobile Protection Association (APA) and has good advice to protect your interests. A membership in the non-profit organization is worthwhile.

“The APA has a trade-in appraisal service. In the GTA, John Wallischeck at Autolink will appraise the car at his location and recommend a fair market value for the vehicle as a trade-in and a somewhat

higher amount for a private sale,” says Iny. That distinction is important. It’s easy to ballpark what your car is worth by dropping it into Autotrader or Car Gurus, but keep in mind, it’s a reference for guidance on a retail price; if you’re trading it in, you will receive less. It can be difficult to get an appraisal because most dealers want to know you’re committed to buying before they’ll offer up a number. Go in with some idea of your vehicle’s worth.

Wallischeck has this advice for prepping your car for trade-in: clean up the vehicle thoroughly, removing stuff from the interior and trunk; if the interior is a mess, consider having it cleaned professionally; collect your original bill of sale, service and insurance claim records; consider getting a recent Carfax report, especially if claims-free (important for a private sale, as is the UVIP); and don’t do bodywork or repairs the dealer can perform for far less; trying to hide scrapes or dents is worse than just letting them show.

“You can also go to the used car department of a dealership that sells your brand and let them know you want to sell the car. A few will offer to buy direct from a retail customer or take it after you trade (to help reduce your sales tax). Some will provide an appraisal ‘for insurance’ or some other reason, possibly for a charge. Bring your original bill of sale and proof of car loan repayment, as dealers in this situation are always concerned about getting defrauded,” says Iny.

For a private sale, you have more work to do. Your car has to look good. Consider replacing worn tires with newer used ones. Before you take photos, remove any accessories or racks, hitches, rims, or add-ons that are not included in the sale. Separate winter tires are a huge selling point. Read the tips on the selling site you choose for how to take great pictures. I can’t stress how important good pictures are; if you have damage, be upfront about it.

Iny notes the upside to trading your vehicle into a dealer is the tax savings.

“You pay tax on the difference between the prices of the old and new vehicles. For a used vehicle worth, say, $10,000, you would be saving $1,300 in sales tax. If you’re selling privately that means you’d have to advertise it at $12,000, less the expected discount, just to come out even with the trade-in value.” Another upside is not having the hassle of posting and dealing with strangers, something I personally won’t do.

Iny cautions if you’re switching brands, between domestic, European, and Asian. That Audi dealer doesn’t really want your trade-in Kia and will give you less for it, though they’d comfortably take a BMW off your hands. “You may get a better outcome if the dealership is part of a network that includes your brand, but you may want to ask them to have the appraisal done at their other store and take the vehicle over there yourself with the name of a person to see.”

Occasionally, someone will sign a new contract, including their trade-in. What if you change your mind?

Don’t. That contract, including the trade-in, is binding. Keep an eye on two things: If they offered you double what your old jalopy is worth (Iny: “it’s not because you’re a genius”) and you know it, they’re getting it back on the new vehicle price. Second, there is a clause they can use to drop the amount on your trade-in when they finally get it, maybe weeks after they’ve appraised it. You will get less if the car has deteriorated in that time.

Right now is a peak time to trade in your vehicle. We’re entering the selling season with restricted inventory. According to Iny, “if last year is any indication, as soon as restrictions are relaxed a bit at the end of May, sales will blast off and rocket all summer. This definitely impacts what dealers are able to pay for used vehicles. If you have a recent pickup or large SUV you’re in luck, because supply is tight and exporting to the U.S. has driven up prices — dealers are paying near Canadian retail for your trade.”

The timing is great, regardless of which avenue you pursue.

WHEELS

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2021-05-08T07:00:00.0000000Z

2021-05-08T07:00:00.0000000Z

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