Many people believe it is easiest to trade in your current car when buying a new one.  However, is trading the right choice for you?  There are some advantages and disadvantages to trading.

The big advantage to trading over selling is that you have very little hassle.  You don’t have to haggle with buyers and you get rid of your car quickly.  However, the fact is that you aren’t going to get as much for your car if you trade it in.

Any used vehicle has a specific retail value.  If a dealership is going to sell that vehicle, they will have certain expenses, such as fixing dents and scrapes, cleaning it, and just overhead costs of running their business.  Therefore, the dealership has to sell it for a little more than a private owner would.

Since dealers need to make a good profit on used vehicles, they purchase them for less than the retail value.  When the dealership takes a trade in vehicle, they are essentially purchasing it from the new car customer, and at a price below the retail value.  Essentially, this is called the trade in value.

Although trading in your car is easier than going through the hassle of trying to sell your car privately, you are going to get less money for your vehicle.  If you sell your vehicle on your own, you can put the extra money you get towards important things such as an auto warranty and maintenance costs.  And with used vehicles, used car warranties are a smart choice.