The idea of selling your vehicle can be daunting, especially if you’ve never sold a vehicle before. When friends or family ask me for advice on selling their car, I start by getting an understanding of their situation and ultimate objective. The first question I typically ask is, “Why are you selling the vehicle?” The answer to this question tends to fall into one of three categories:
- I want a different or upgraded vehicle (new vehicle, updated features, etc.)
- I want to reduce my monthly payment and/or maintenance costs (I want to save money)
- I no longer need the vehicle and do not plan to replace the one I’m selling
The next thing I want to know is, “What matters most to you: price or convenience?” Historically, in every vehicle sale there is a trade-off between the amount you’re going to receive for your vehicle and how easy the transaction is to complete (here at Gauge, we’re working on changing that norm). Usually, the questions I ask sound something along the lines of:
- Are you thinking of selling to a dealer or more interested in selling privately?
- Do you have time to meet with potentially interested private buyers?
- Would you be okay with keeping your vehicle on the market for 30-90 days to get an extra $500-$1,500 for your car?
- Have you received a CarMax offer yet? If you had to sell for that amount, how disappointed would you be?
Personally, I’m a price-maximizer, so I’m willing to put in an inordinate amount of work to get a little bit more for my vehicle. But since everyone is different, my goal is always to equip people to make the choice that makes the most sense for them. Here’s how I guide people based on their answers to the questions above.
I’m selling my car because I want or need a different vehicle.
For the person who wants to maximize price:
If you already have a vehicle picked out and you know which dealer you’re going to buy from, you’ll want to get a trade-in offer and then calculate the sales tax credit you’ll get from your trade-in (note: this credit is not available in all states). The following example illustrates how the sales tax credit works:
Let’s say you’ve decided to purchase a new car for $25,000, and the dealership you’ve chosen to buy from has agreed to pay $10,000 for your trade. The trade-in offer is deducted from the purchase price of the new vehicle, and the difference between the purchase price and the trade amount is what you’ll pay taxes on.
Using this equation, if sales tax in your state is 7%, then your trade-in offer is effectively $700 higher! As you consider other offers, now you know that the number to beat is $10,700 (trade-in offer + sales tax credit).
Armed with this information, your next step is to list your vehicle for sale privately (craiglist, Facebook, or other marketplace services are great for this), start meeting with buyers, and then leverage that offer to make sure that you’re selling the vehicle for more than that amount.
Tip: You can try to make the buyers compete for your vehicle; just remember that if you push it too far, you could end up losing your highest offer. The moral of the story is if you have a good offer, don’t let it sit there for too long.
If you haven’t yet picked out the vehicle you want to buy or the dealership you want to buy it from, I recommend listing your vehicle for sale privately and getting dealer offers through Gauge at the same time. You’ll be able to leverage the offers you get through Gauge when negotiating with private buyers, and you’ll have a great backstop if you’re not getting the interest that you thought you would in the private market. If any of the offers you receive through Gauge are from a dealer that has a vehicle you’d like to buy, you can still take advantage of the sales tax credit to boost that offer even higher. This will often be very comparable to what you would have received selling privately, or it could be even higher because you can sell about 30 days sooner (on average) and avoid continued depreciation, car payments, insurance, etc.
For the person who wants the most convenience, just trade in your vehicle when you purchase your next one (you probably didn’t need me to tell you that!).
And if you’re somewhere in between, I recommend listing your vehicle, seeing if you get some bites on the private market, but know that you’re most likely going to do a trade. You should get some other dealer offers (online dealers like Carvana and Shift will give you offers on their website, and Gauge is obviously always happy to get you offers as well!) and see if the dealer you’re buying from is willing to increase their trade-in offer to match — or at least get closer to — one of these other offers.. It’s very possible that the dealer you’re buying from is just going to wholesale your vehicle (sell the vehicle to another dealer), in which case they likely aren’t going to make very much money on it, if any, so don’t feel bad if they aren’t able to increase the offer. At least you tried!
I’m selling my car because I want to save money.
For the person who wants to maximize price:
Since your focus is less on the specific vehicle and more about cost savings (whether that means reducing your monthly payments, annual maintenance, or fuel costs), I always advise doing a little research into (a) whether to buy new vs. used, and (b) whether to finance or lease. Check out our Buying a Vehicle Calculator to help you home in on the specific options that you’ll want to do the most research on. For example: buying a used vehicle that costs $5,000 less than a brand new one may not always save you money, since it will carry a higher interest rate and cost more to maintain. In some situations, you may be better off taking advantage of promotional interest rates from a manufacturer and buying a new vehicle. You can easily adjust all of these parameters using the calculator. Once you have a good idea of the options you want to pursue, start looking at specific vehicles that meet those criteria.
For the person who wants the most convenience, I recommend using our Buying a Vehicle Calculator (coming soon!) to figure out the approximate price and monthly payment that you want for your next vehicle. Then start shopping online and at local dealerships to find the right vehicle to meet your needs. Since you are still looking to be cost-effective, I recommend also getting offers from Gauge to make sure you’re getting a competitive trade-in offer from the dealership that you ultimately purchase from (or you can take one of your highest Gauge offers and trade in at that dealership).
If you’re somewhere in between, my advice is the same as to the person who is trying to maximize price, because that will help you get a good understanding of all of your options. Once you understand the options, you can decide to list privately, get offers from Gauge, or simply to refinance your current vehicle.
I’m selling my car because I no longer need it, and I do not intend to replace it.
If you’re just selling a vehicle and not buying another, all of this becomes a lot simpler: you only have to consider the price vs. convenience trade-off, and you don’t have to worry about your next purchase. If this applies to you, I recommend taking the following steps, in this order:
- Go through the Gauge offer process to receive your free condition report and start receiving offers from dealers.
- List your vehicle for sale privately using the free condition report you received from Gauge (craigslist and Facebook Marketplace are a great start, but use whichever platform you’re most comfortable with).
- Accept an offer that best fits your needs and priorities.
- If your goal is to maximize price, leverage your Gauge offers to see if a private buyer will beat it. It may take you a little longer to sell, but if you’re willing to hold out for 30-60 days, you’ll typically be able to get a higher offer in the private market (and you always have Gauge as a backstop).
- If you’re more concerned with the convenience factor, take the highest Gauge offer you receive by days 3-5. This window is critical. It allots enough time that all of the prospective buyers who are very interested in the vehicle will have had time to bid against one another, but not so much time that offers will expire and vehicle depreciation will occur (vehicle prices change daily at auction, and used vehicles typically don’t gain value over time).
- If you’re somewhere in between, I still recommend trying to close the sale within the first 5-14 days so that you can capitalize on the initial offers you receive (private buyers don’t stick around forever), do not have to make continued payments, and don’t have to worry about the vehicle continuing to depreciate. Additionally, the longer you hold the vehicle, the more opportunities there are for something to go wrong (mechanical or accidents).