If you want to get the full value of your car when you sell it and don't mind putting in extra work, selling it yourself is probably the right option for you. If convenience is your bigger concern, you can drive it to a dealer and trade it in or leave it to sell on consignment. Either way, there are several legal and commonsense guidelines you should keep in mind to protect yourself - and your investment.
Whether you are selling your car yourself or trusting a dealer to do it for you, your first - and most important - step should be researching a competitive price. Call several local dealers to price similar makes and models. Check the Blue Book price. Consumer Reports recommends setting the price slightly higher than you are willing to take for it so you will be open to negotiations, but keeping it low enough that it is still within potential buyers' range. Scambusters.org warns that a dealer will advise you that any price you set is too high, then keep any profit above the number you agreed on when you brought it in. In either case, you only have one opportunity to ensure you are getting the best deal.
The steps to selling your car are fairly self-evident: collect the necessary paperwork, advertise, show the car to prospective buyers and, finally, seal the deal. The actual procedure, however, can be frustratingly time-consuming. First, make sure all your maintenance records are in one place. If your car has had a lot of repairs, check your state to make sure it does not fall under the legal definition of a lemon, According to the American Bar Association, you might have a problem if your car has been treated for the same repair at least four times within the same six-month or one-year period, or if it has been out of commission for 30 consecutive days.
Consumer Reports recommends advertising on Cars.com or Kelley Blue Book, which take ads for small fees. Accompany prospective buyers to an inspection and, if you have an outstanding loan, be prepared to go to the lender with the buyer to make sure everything is properly paid off. Finally, check with your state DMV to see what documentation you will need to keep, which can include odometer readings, the sales price and official title-transfer forms.
The attraction to allowing a dealer to sell your car for you can also be the biggest drawback: You don't do the work yourself. While that frees you from the responsibility of meeting with buyers and filling out much of the boring paperwork, it also means the seller might not have your best interests at heart. Scambusters.org recommends sticking to the price you set from the outset, even if the dealer calls and tries to negotiate you down. On the plus side, MSN.com advises that trading in your car could net a tax advantage if you buy a new car at the same time. That's because most states will charge sales tax only on the difference between your new car and your trade-in, a benefit that in states with high sales taxes could narrow the profit margin between trading your car in and selling it yourself.
