Part exchanging your current car can make upgrading to a new car much more affordable.
After thousands of miles and lots of great memories, it’s time to replace your old car with something newer. Whether you’re upgrading or simply replacing, knowing the best way to sell or exchange your old car can make replacing it far more affordable.
One of the biggest choices you face when buying a new car is working out whether to sell your old car privately or part exchange it with the dealer to get a discount on a newer model.
In this guide, we’ll look at the advantages and disadvantages of both methods and help you work out the best way to sell or trade your car when the time comes to upgrade to something newer.
The advantages of part exchanging your car
Part exchanging your car has a range of benefits. The biggest, for most car buyers, is its convenience. While selling your car can take weeks, or even months, doing a part exchange lets you immediately exchange your old car towards a new one.
Instead of having to list your car for sale and wait for a buyer, you’ll be able to trade in your old car right there at the dealership. This makes part exchanging a great idea if you’re pressed for time and don’t want to wait for your old vehicle to sell.
Part exchanging also lets you bypass the inevitable time-wasters that can come with listing your car for sale online or in the newspaper. The entire process is quick, easy and instant, letting you avoid what could have been a slow sales process.
If you’re trading in your car for a smaller or less expensive car, part exchanging also lets you take a much larger amount off the new car’s sticker price, as a percentage of its total cost.
All you have to do is hand over your car and paperwork, change your insurance to the new vehicle, and your part-exchange car is transferred into trade ownership. In most cases selling your car through part exchange is the easiest route, and when ordering a new car you may find some car dealers will let you keep your car until your new one is ready.
The disadvantages of part exchanging your car
When you part exchange your car, you’re essentially trading some of the money that you could have earned by selling it privately for the convenience of handing it off to a dealership right away.
Remember the value of your part exchange can also be affected by some quite random factors such as the time of the month or the stock levels of that dealer.
Most car dealers sell used vehicles for relatively slim margins, and the price you’ll be offered for your car reflects their need to make a profit. In almost all cases, you’ll get a better price for your car through a private sale than through a part exchange.
Part exchanging your car can also mean lots more negotiation with the dealership – something many people dislike. Not only will you need to negotiate a price for your new car; you’ll also need to negotiate a fair trade-in valuation for your old car.
Getting the most from a part exchange
If you’re short on time and don’t want to deal with the private sale process, trading in your car for a discount on a newer model is a great idea. However, to get the best price for your old car (and the biggest discount) it helps to know a few things.
First, make sure you’re aware of your car’s value. Check private listings and auction websites like eBay to see how much similar models of your car sell for. If you want to have some more negotiating power, print the listings to bring to the dealership.
Make sure you pay attention to factors like your car’s condition and mileage. If you see the same type of vehicle online with a similar mileage and service history, use it as a rough guide to your car’s sales value.
Note that your car’s sales value will always be slightly higher than the dealership’s offer – they need to make a profit on the sale, after all. Think of it as a guide to your car’s best price, not as a realistic target for your part exchange.
Second, don’t accept the dealership’s first offer straight away. Most dealerships will offer a lowball offer hoping you’ll accept to save time. If your car is worth a lot more than what you’re offered, don’t be afraid to negotiate a better price.
Can you part exchange your vehicle if it’s on finance?
In the case of PCP (Personal Contract Purchase) or hire purchase you must clear the finance before actually selling the car. If you part exchange your car, this will be handled for you. Your paperwork should include a settlement figure so that you know what the outstanding debt on the car is and what money is available to purchase a new vehicle. PCP deals are usually written to leave a small profit on the residual value which dealers can use to fund your next PCP deal.
Part exchanging a car on finance such as HP (hire purchase) or secured loans is pretty much the same. The car dealer will commit to pay the settlement figure when they take your car – with any monies left after the car is paid for being used towards your next vehicle.
The advantages of selling your car privately
If you’ve got plenty of time to find the right buyer, selling your car privately is often a better choice than part exchanging it. Most of the time, you’ll be able to get a much higher price for your old car through a private sale than via the dealership.
How the hell do you sell a car? Do I just pitch up at a dealers? (Yes, I know I’ll get less cash than selling privately.)
— Cara Sulieman (@carasulieman) January 24, 2013
The biggest advantage of selling your car privately is that you’ll be able to maximise its sales price. Since there’s no profit margin for the dealership – which drives down part exchange values – you’ll get all of the money from the sale of your car.
A second advantage of selling your car privately is that it lets you take advantage of factors that a dealership may not care about. If your car has modifications or special features, these could be more appealing to a private buyer than to a car dealership.
Finally, if you’re selling a rare or classic car, a private sale is almost always the way to go. Valuable cars – vintage sports cars, for instance – rarely fetch good prices in a part exchange, unless they’re sold to a specialist dealer for that type of vehicle.
The disadvantages of selling your car privately
While selling your car privately usually lets you earn more money, it also has some disadvantages. One of the biggest disadvantages of a private vehicle sale is the time involved; unless you auction your car, a private sale could take weeks or months.
If you’re selling a rare car that only appeals to a niche market, it could take almost a year – sometimes even longer – for you to find a buyer willing to offer the right price for your vehicle.
If your car is only a year or two old, the time required to sell it could result in a drop in its value. This is particularly true for luxury cars, which drop significantly in sales price in the 2-3 years after they’ve been first sold.
Finally, there’s also the possibility of running into time-wasters – people who’ll look at your car only to lowball you on the price or simply not respond. Selling a car takes time – if you don’t have time to spare, a part exchange could be a smarter idea.
Getting the most from your private car sale
Just like you can your discount from a part exchange by knowing how much your car is worth, you can get the most from your private car sale by understanding the value of your car and pricing it accordingly.
Before you list your car for sale, search for similar models on eBay and other private listing websites. List your car at a price that’s similar to other models to make sure you’re not selling it for a lot less than it’s worth.
For a quick sale, you might want to price your car slightly below similar models. Just make sure you aren’t too generous with pricing, as you could end up selling your car for almost the same amount as you would earn by part exchanging it.
Watch out for Scams
Scams with private car sales are thankfully still rare however you need to be aware that they do happen. One of the biggest scams to avoid with online car purchases is money laundering. Be wary of buyers looking to pay with very large amounts of cash. If it turns out that your car has been paid for with laundered money, you could lose both the car and the payment. The safest and easiest way to accept payment for your car is via a direct bank transfer.
Do not part with your car until you’ve confirmed payment. You shouldn’t believe any payment confirmation or verification sent to you apart from seeing the money safely in your own bank. Make sure that the full, agreed price is in your bank.
Which option is best for your old car?
Both selling your car privately and part exchanging it to a dealership have upsides and downsides. Which option will you use when it’s time to upgrade your car to a newer model?
Thanks for reading. Make sure to stay tuned to the Warrantywise blog, Facebook and Twitter for more great content throughout 2015!