Automotive

selling a 20k vehicle privately vs trade in at dealership

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  • Jan 29th, 2019 9:23 am
[OP]
Newbie
May 7, 2014
59 posts
12 upvotes
Winnipeg , MB

selling a 20k vehicle privately vs trade in at dealership

Hi ,

If you are not getting another vehicle (so no trade ins) and your current vehicle is worth more than 10k , is there any situation where private sale might make sense ?

Taxes alone on a 20k vehicle will be 2600$ and in my opinion , it is really hard to get that much extra with private sale .
21 replies
Deal Addict
Jun 26, 2009
3511 posts
2286 upvotes
GTA
Buyer pays tax on vehicle you sell, not you. Dealer will most likely low ball and offer 13-15K on 20 K vehicle. Dealers love easy money. The only thing you need to be careful with, is your payment. Bank draft or certified cheque only. The best way is to go with your buyer to his bank, to get/ validate the cheque. No wire transfers, bitcoin or Canadian Tire money Grinning Face With Smiling Eyes
Deal Addict
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Nov 18, 2006
2668 posts
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Pothole city
stevesingh wrote: Hi ,

If you are not getting another vehicle (so no trade ins) and your current vehicle is worth more than 10k , is there any situation where private sale might make sense ?

Taxes alone on a 20k vehicle will be 2600$ and in my opinion , it is really hard to get that much extra with private sale .
In Quebec it's a no brainer if you're buying another car from a dealer. You should always do a private sale through the dealer you're buying a car from. Works the same if you sell to the dealer but you're usually getting less for your trade-in.
It's called "accomodation sale". You don't pay any tax on the value of the car you'are trading in.

Let's say you buying a new car for 30K before tax and selling through the dealer via a private sale for 20K (free of dept)
Assuming Quebec taxes of 15%

Accomodation sale:
(30000$-20000$)*0.15= 1500$ in taxes
30000$-20000$(cash)+1500$=11500$

Regular sale

30000$*0.15=4500$
30000$+4500%-20000$=14500$

3000$ difference :)
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Deal Fanatic
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Jun 26, 2005
9844 posts
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Toronto
There's more to compare than just money

Meeting strangers

Letting them test drive where some idiots will drive the crap out of it on purpose

Remember that poor guy who got murdered for selling his truck? So take precautions.
Deal Fanatic
Aug 29, 2011
5048 posts
2386 upvotes
Mississauga
You will make more money selling privately but it is more work (taking photos, listing it, dealing with lowballers, meeting and offering test drives, etc.)

How much is your time worth to you?
Deal Fanatic
Sep 1, 2004
5376 posts
4045 upvotes
rfdrfd wrote: There's more to compare than just money

Meeting strangers

Letting them test drive where some idiots will drive the crap out of it on purpose

Remember that poor guy who got murdered for selling his truck? So take precautions.
Another reason why leasing is better.

I am sick of kijidiots either doesn't know anything or they do but keep trying to low ball you. Both wastes your time if not out right dangerous.
Deal Guru
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Jul 12, 2003
10894 posts
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Toronto
mrweather wrote:
How much is your time worth to you?

For a $20000 car, the difference can be $8000.
I'd sell it private. You never know if anyone is actually looking for a car like yours.

I sold my wife's car within 3 days in kijiji and within 10% of my desirable selling price. I only met 2 buyer and they both willing to buy it at similar price and I sold it to the one that agree to go certified on his own.
My other car, the dealer offered me 1k as trade in and I sold it for $6500 privately and kept my winter tires to sell it off kijiji sepatately for another $600. Grinning Face With Smiling Eyes


The extra time do actually worth for me to sell it privately.
Retired Forum Moderator February 2009 - June 2015
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Dec 14, 2017
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Tommy74 wrote: Buyer pays tax on vehicle you sell, not you. Dealer will most likely low ball and offer 13-15K on 20 K vehicle. Dealers love easy money. The only thing you need to be careful with, is your payment. Bank draft or certified cheque only. The best way is to go with your buyer to his bank, to get/ validate the cheque. No wire transfers, bitcoin or Canadian Tire money Grinning Face With Smiling Eyes
Out of curiosity, why would you not accept Bitcoin (provided you understand it)?
Deal Expert
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Oct 28, 2004
20878 posts
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Toronto
selling privately will net you more money vs the dealer (dealer will lowball you for sure and dealer will easily make $2K - $3K on a used car sale)...but like others said, it will take up your time and you really have to be patient.

I sold our '14 Lexus RX350 for over $20K - posted on Kijiji and it took ~1.5 mos - got a lot of lowballers and met three people in person to show the car and allowed them to test drive.


One of them really liked the car and negotiated - I think they got a great deal given the condition of the vehicle and all the extras I threw in (i.e. winter tires, lowered price, all the mats etc).

It took time though and you have to really ignore the lowballers!!
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Oct 14, 2010
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Barrie ON
Let me try to explain this a little different, using real examples.

Let's assume you are trading in an older model RDX for a new RDX. You have haggled with the salesman for an hour and managed to get an Aspec for $50,000, and he offers you $24,000 for your trade in. Your final cost is...

$50,000-$24,000 or $26,000 plus 13% tax ($3,380) for a grand total of $29,380

But you did some searching on Autotrader and discovered that you can sell that used RDX for $27,120 privately. That's $3,120 more than the dealer offered. So you jump at the chance and sell your old RDX privately and take the $27,120 cash back to the dealership.

Your cost for the new Aspec now is....

$50,000 + $6500 (13% tax) for a total of $56,500
Now you give the dealer the $27,120 you got from selling your old RDX which leaves
$56,500 - $27,120 or $29,380 still required to buy the new Aspec.

So....... it seems that even though you may get $3,120 more by selling your used RDX privately, you are not a penny richer when you drive the new Aspec out of the dealers lot.

Now what happens if it takes a month before you sell that old RDX privately. You might have to borrow the $27,120 you are waiting for, in order to pay the dealer. You have now lost more money by paying the interest on the loan. Even if you have lots of savings and can just take the $27,120 out of your investments, you have lost the money that your investment would have made.

It will also cost you another month of insurance payments on your old RDX while people take it for test drives.

And of course there is the inconvenience of waiting for people to show up for test drives, the risk of the car being damaged during a test drive, and the frustration of arguing over the price.

I always trade my used vehicle at the dealers.

Edit: Don't be surprised when you see your old RDX on the dealers used car lot with a price tag of $27,120 (same as the Autotrader price) even though he only gave you $24,000 trade in value. Sure the dealership makes money on your trade in, but you didn't really lose either.
Sr. Member
Jul 21, 2009
941 posts
369 upvotes
Toronto
Sold a car for 18k last year when the dealer offered me 14k

Took about 1 month of replying to a lot of offers on both kijiji and autotrader. Lots of spam and lowballers on kijiji from my experience. The only person that ended up coming by bought it a few days after after test driving so it was a pretty painless experience.
Sr. Member
Aug 13, 2006
753 posts
530 upvotes
Ottawa
Rick007 wrote: Let me try to explain this a little different, using real examples.

Let's assume you are trading in an older model RDX for a new RDX. You have haggled with the salesman for an hour and managed to get an Aspec for $50,000, and he offers you $24,000 for your trade in. Your final cost is...
$50,000-$24,000 or $26,000 plus 13% tax ($3,380) for a grand total of $29,380
The problem with your example is: most dealers won't offer 24K for a 27K car. Most likely offer will be below 20K
Deal Fanatic
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Sep 1, 2005
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Markham
Selling privately is a PITA....especially selling to strangers.

Consider putting together and "ad" and offering it for a little more than what you'd ultimately get from the dealer and send it to friends and family. Put it down that the price is firm as you can get the amount on a trade.

Hopefully someone (like a young driver perhaps or someone looking for a second/third vehicle) might benefit (this assumes your car is in good shape and well maintained...if that isn't the case let your headaches go to the dealer instead because you don't want negativity from family/friend/co-worker). Why let the dealer profit when they resell it.
We're all bozos on the bus until we find a way to express ourselves...

Failure is always an option...just not the preferred one!
Member
Jan 14, 2012
382 posts
100 upvotes
Oshawa
7865875 wrote: Out of curiosity, why would you not accept Bitcoin (provided you understand it)?
Regulatory reasons probably
Deal Addict
May 4, 2014
4355 posts
5089 upvotes
Toronto, ON
Rick007 wrote: Let me try to explain this a little different, using real examples.

Let's assume you are trading in an older model RDX for a new RDX. You have haggled with the salesman for an hour and managed to get an Aspec for $50,000, and he offers you $24,000 for your trade in. Your final cost is...

$50,000-$24,000 or $26,000 plus 13% tax ($3,380) for a grand total of $29,380

But you did some searching on Autotrader and discovered that you can sell that used RDX for $27,120 privately. That's $3,120 more than the dealer offered. So you jump at the chance and sell your old RDX privately and take the $27,120 cash back to the dealership.

Your cost for the new Aspec now is....

$50,000 + $6500 (13% tax) for a total of $56,500
Now you give the dealer the $27,120 you got from selling your old RDX which leaves
$56,500 - $27,120 or $29,380 still required to buy the new Aspec.

So....... it seems that even though you may get $3,120 more by selling your used RDX privately, you are not a penny richer when you drive the new Aspec out of the dealers lot.

Now what happens if it takes a month before you sell that old RDX privately. You might have to borrow the $27,120 you are waiting for, in order to pay the dealer. You have now lost more money by paying the interest on the loan. Even if you have lots of savings and can just take the $27,120 out of your investments, you have lost the money that your investment would have made.

It will also cost you another month of insurance payments on your old RDX while people take it for test drives.

And of course there is the inconvenience of waiting for people to show up for test drives, the risk of the car being damaged during a test drive, and the frustration of arguing over the price.

I always trade my used vehicle at the dealers.

Edit: Don't be surprised when you see your old RDX on the dealers used car lot with a price tag of $27,120 (same as the Autotrader price) even though he only gave you $24,000 trade in value. Sure the dealership makes money on your trade in, but you didn't really lose either.
Not rocket science. The difference is simply the tax you would've paid on the dealer's trade-in price. If you can find someone privately willing to pay more than the dealer price plus the difference, then you come out ahead. It really depends on the car too, some dealers will intentionally low ball your trade if they want nothing to do with it(even the hassle of auctioning it off at wholesale) - this is especially true with older trade ins.

Personally I never understood why the tax credit only applies when you buy from dealer and not private sales, it's an unjust system that serves to benefit dealerships. By allowing tax credit on private sales, it would actually help ensure buyer/seller report the private sale price accurately and the buyer of the used car pays their fair share of taxes to the ministry, instead of faking the sale price to cheat taxes when they register the car.

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