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If you're planning to sell your car, determining its value will depend on a variety of factors, including its age, condition, mileage and market conditions. Getting the most out of your car sale requires that you understand these factors and capitalize on the ones you have some control over.
Because new car inventory has been impacted by the coronavirus pandemic, used car prices have skyrocketed. According to the Bureau of Labor Statistics, the price of used cars and trucks increased by 41.2% in February 2022 compared with the same period last year.
While that might mean you'll pay more on your next vehicle, maximizing your profit on the sale of your current car can help increase your down payment. Here's how to position yourself to make as much money as possible on your car sale.
How to Maximize Your Profit When Selling Your Car
As you prepare to sell your car, here are some steps you can take to get the most out of the deal.
Give Yourself Time
One of the biggest factors that can work against you when negotiating a car price is time. If you've already purchased a new car or you're impatient to get the process over with, that pressure can cause you to take an offer that's not ideal.
On the flip side, if you have all the time in the world to sell your car, you can wait until the right offer comes along.
Sell It to a Private Party
There are two ways you can sell your car: via a trade-in to a dealership or to a private party. Trading in the car while buying your next car is a lot more convenient because the dealer takes care of the paperwork and loan payoff.
But dealers offer less money for trade-ins than you can get by selling the car to a private party because they need to make a profit when they turn around and sell the car to another buyer. In some cases, the difference between your car's trade-in value and its value in a private-party sale can be thousands of dollars.
While selling to a private party requires more legwork, it's necessary if you want to maximize your profit.
Know the Vehicle's Value
Using Kelley Blue Book or NADAguides, search for your car's value by entering in pertinent information like its make, model and year, mileage, condition and features. It's important to be as accurate as possible so that you can get a reasonable estimate.
Instead of getting a set value, you'll be provided with a range of values for your car. Knowing this information not only helps you set the listing price for the car, but it can also help you determine where to start with the negotiation and the lowest amount you're willing to take.
You can expect prospective buyers to look up this information as well, so you'll want your starting price to be on the high end of the range. Otherwise, the negotiation can turn in the buyer's favor more quickly.
Focus on Curb Appeal
The better your car looks in pictures and in person, the easier it will be to justify a higher price to potential buyers. Consider hiring someone to detail the vehicle so it's clean inside and out, and take care of minor maintenance and mechanical issues.
In other words, you want to give buyers as few reasons as possible to believe that the vehicle is worth less than you're asking.
During the negotiation process, point out new parts you've had installed or your maintenance schedule and receipts to show that you've taken good care of the vehicle. You may also include after-market products if applicable.
Don't Be Afraid to Walk Away
Whether you're selling to a dealer or a private party, you should generally expect some haggling, and it's likely that you'll need to give at least a little on the price unless you undercut yourself from the start.
But some buyers may be unwilling to negotiate in good faith or may try to get you to go lower than your rock-bottom price. If you don't feel comfortable with a negotiation or you feel like it's not going the direction you want, don't be afraid to walk away. There will always be other buyers.
If you have several similar bad experiences, though, it might be worth it to revisit your listing price and consider making an adjustment going forward.
Prepare Your Credit for Your Next Car Purchase
If you're planning to sell your car soon, it's likely because you want to replace it with a new one. If you intend to borrow money to buy the new car, having good credit could save you hundreds or even thousands of dollars on the auto loan.
Check your credit score and review your credit report to get an idea of your overall credit health and pinpoint areas that need to be addressed. Examples may include paying down credit card balances, disputing inaccurate credit report information and paying off delinquent and collection accounts.
Building credit can take time, but even if you can only increase your credit score a little, it can still make a difference for your interest rate.