PVT Party or Trade-in

[bowhunter1023]

The last 2 times we've made a vehicle swap, I sold our other own to maximize our return. But, it's a pain in the ass and I'm not sure I really netted that much more after the fact. Just curious how you guys typically view/treat this transaction.

In this particular instance, I should get on trade what I owe at minimum, but I could be leaving $3K on the table if I sell it private party. I have a nice down payment, so a break even trade is more a convenience thing.

 

[5Cent]

Calculate taxes saved on the dealership purchase with trade-in amount and see if its enough vs that $3K to sell private.

 

[Schu72]

There are tax implications most people don't take into account or costs and time associated with selling on your own.

From my perspective a lot will depend on the actual value of the vehicle you are looking to "swap". You do not pay sales tax on the portion of your trade. So if you buy a new vehicle for $30,000 and your trade is valued at $10,000 you will only pay sales tax on $20,000. If you sell your vehicle outright and bring cash into the deal you will pay sales tax on the entire purchase price. So in my example you would to sell your vehicle for 10,750 to gain anything. In addition to that you have to advertise, deal with people, transfer titles, go to banks, get a notary......usually not worth my time.

 

[Big_Holla]

If there isn't anything mechanically wrong with it I would sell outright, or at least give it a try for a little while. Definitely worth the extra $$ you already invested in it. If something wrong then the trade in leaves you with a sound mind that they will take it and hopefully fix the problems before selling.

 

["J"]

What’s the value of the vehicle for trade in vs private part sell? Like Adam said, deduct the sales tax and see where you’re at. That net hopefully will make it advantageous too do. If not, trade that puppy in...

 

[bowhunter1023]

Only speculative right now based on KBB, but it's a $3K gap ($11K vs. $14K) on a $35-40K purchase. So, $40K at 7.5% is $3K and $29K at the same % is $2,175.

 

["J"]

Only speculative right now based on KBB, but it's a $3K gap ($11K vs. $14K) on a $35-40K purchase. So, $40K at 7.5% is $3K and $29K at the same % is $2,175.

So the difference would be what for the trade in vs handing them 14k from the sale? Couple hundred?

 

[bowhunter1023]

Yep. $225. But, that doesn't take into consideration that PVT party could net me more $ to put down, so there's that savings to consider. I'm going to get even up trade on loan balance from a dealer. But I have equity in the private market. Not a lot, but some. Trying to weigh the balance of easy and off my plate, or do some work for tha extra $2-3K in equity.

 

["J"]

Yep. $225. But, that doesn't take into consideration that PVT party could net me more $ to put down, so there's that savings to consider. I'm going to get even up trade on loan balance from a dealer. But I have equity in the private market. Not a lot, but some. Trying to weigh the balance of easy and off my plate, or do some work for tha extra $2-3K in equity.

So you’ll be saving roughly, what? 6 months in payments in theory?

 

[bowhunter1023]

There abouts. I've not done any of my new purchase math using my current truck, so my budget is built with the opportunity to make it more favorable. If I do sell it for a gain, I'd just be paying myself back a portion of my intended down payment.

 

[xbowguy]

A friend of mine is a sales person. She says to work your best deal and then bring the trade in. This way you get to see the REAL Values involved.

 

[Schu72]

I'm not sure I see where your $225 comes from. Trade in would off set $825 in tax burden, but not cover your estimated $3000 value gap.

Keep in mind trade values can be negotiated and can vary wildly by dealership and current used car demand. We just traded in my wife's Durango last week. The dealership we bought it from and had done more than 20 years business tried low balling us on trade. We walked. A few days later we visited another dealership and they offered us $5,000 more in trade! The rest of the deal was very similar: MSRP, rebates and incentives, etc. Definitely shop around....

 

[Quantum673]

I believe all this changes though if you owe on your truck. Only the equity you have in your truck would save on taxes if I remember correctly. So if you are basically even (trade in value is equal to payoff) then there is no tax incentive. Only incentive is the ease of trade in versus private party sale.

I do agree that if you are going to trade in always work the deal first with no trade then add the trade.

 

[bowhunter1023]

I'm not sure I see where your $225 comes from. Trade in would off set $825 in tax burden, but not cover your estimated $3000 value gap.

Keep in mind trade values can be negotiated and can vary wildly by dealership and current used car demand. We just traded in my wife's Durango last week. The dealership we bought it from and had done more than 20 years business tried low balling us on trade. We walked. A few days later we visited another dealership and they offered us $5,000 more in trade! The rest of the deal was very similar: MSRP, rebates and incentives, etc. Definitely shop around....

Difference in taxes w/ $11K vs. $14K down. The assumption was I owned my truck outright, which is an option. I've just sat tight on paying it off until I'd ran all the various scenarios.

 

[Shotgunnwilly]

A friend of mine is a sales person. She says to work your best deal and then bring the trade in. This way you get to see the REAL Values involved.

Always start shopping at the last week of the month as well. Especially if it’s a new car and wait until late fall to get the massive rebates on left over models. Also when buying new try to find the same vehicle at a competitor then make them work against each other to earn your business.

 

[bowhunter1023]

Since we're on the topic, I'm interested in hearing thoughts on buying new vs. slightly used. I've always heard the adage "let someone else take the hit", but with the current market and great need for OEMs to sell new, their incentives are pretty sweet. Obviously, it boils down to budget, but I'm curious how others view the depreciation aspect in relation to being new and likely a long-term investment.

 

[hickslawns]

My experience with selling stuff in the last few months? Very few have the money. Everyone wants to trade their garbage for your nice stuff. Just one thing to consider with selling outright. May be different if you are talking $10-15-20k items.

 

["J"]

Look at the company certified vehicles as well, Jesse. Usually a company leased vehicle with a new car warranty. It’ll save you $$$ and have a new car warranty

 

[Shotgunnwilly]

Since we're on the topic, I'm interested in hearing thoughts on buying new vs. slightly used. I've always heard the adage "let someone else take the hit", but with the current market and great need for OEMs to sell new, their incentives are pretty sweet. Obviously, it boils down to budget, but I'm curious how others view the depreciation aspect in relation to being new and likely a long-term investment.

I used to be an ace car salesman. Loved the job and meeting people! Best month was 22 vehicles sold. Had to leave because the hours were just to much raising a small family. Miss it, but eventually see myself doing it again later on in life. With that being said it all depends on the mileage in my opinion. If you buy new vehicle and rack up a ton of miles then you’ll have greater depreciation unless it’s a wrangler, or a diesel. They seem to hold their values like crazy. If you buy a new car every 3-4 years you’re better off leasing. Yes you’ll pay in the long run if you go over miles but you can usually keep your payments lower and they have to fix it if somthing goes wrong you can also buy the lease at a pre determined price at the sale too and don’t worry about the mileage. But in the end if you keep your vehicles for an extended period of time always buy used by 3-4yrs with low miles and a CLEAN CARFAX. That’s important .

 

[Big_Holla]

Since we're on the topic, I'm interested in hearing thoughts on buying new vs. slightly used. I've always heard the adage "let someone else take the hit", but with the current market and great need for OEMs to sell new, their incentives are pretty sweet. Obviously, it boils down to budget, but I'm curious how others view the depreciation aspect in relation to being new and likely a long-term investment.

We have always been the let someone else take the hit and bought used. While looking for our new truck we ran into a market of higher priced used vehicles, especially trucks, that surprised us. We were prepared to buy a vehicle that was a few years old and had 60K miles on it as it seemed to be a good deal for what it was. My wife had contacted a dealer about the vehicle we ended up purchasing and asked him what the best deal was he could give. After a few phone calls and a few trips to his finance department we ended up with a payment of $50 more a month for the same length of loan as the used vehicle was. Boiled down to better interest rate with new and they were willing to deal since it had been on their lot since November of last year.