Buying a car: cash vs part exchange

Filed under: Classic News |

Buying a new car should be one of the most exciting things to do in life, but all too often that joy is tempered by the realisation that you’re going to have to get rid of your old one.

It’s something many of us lack confidence doing, especially as it induces a nagging doubt that somewhere in the process we’re being ripped-off.

So, what are your options?

Buying your new car for cash

It used to be the case that to secure the biggest discount on a new car, flashing a wad of cash in front of the dealer was virtually guaranteed to work.

Not only did the dealer have the whole car paid for up front, meaning there was no risk of monthly payments being defaulted, they also didn’t have the hassle of selling your old, part-exchanged car.

While this is still true, finance packages offered by manufacturers tend to be a route to bigger discounts these days.

Still, if you’re planning on buying cash, the chances are that most of that pile of notes will come from selling your old car yourself, which can be a hassle.

Selling your car via an online – or less commonly print nowadays – classified advert is a great way of reaching potential buyers nationally, increasing your chances of selling it quickly, and for a price you’re happy with.

Sharing the advert on your social media channels, as well as with relevant owners’ clubs can also be beneficial.

There are potential pitfalls, though. It’s vital that you ensure the buyer’s funds have cleared before you and them the keys otherwise you could potentially have no car or money for it. Similarly, if they want a test drive, ask to see proof of their insurance, otherwise you will be liable for any damage they cause.

Remember, if at any point you feel uncertain about the buyer, it’s your property so you can simply refuse to sell it to them.

If you don’t fancy dealing directly with buyers, you could sell it through a car auction house. While this could be convenient, if your old car isn’t especially rare or desirable, there’s a strong chance that you might end up getting less for it than if you had traded it in. Plus, you’ll also have to pay commission to the auction house, which could be as high as 10%.

Car buying services, such as We Buy Any Car, also offer a pain-free way of getting rid of your old car, but again, be warned – the convenience of such businesses is paid for by offering low prices for the cars they buy. If you need to sell quickly, that might be something worth considering.

Part-exchanging your old car

By far the easiest way to dispose of your old car is to part-exchange it with the dealer you’re buying your new one from.

As the name suggests, by trading it in, you are paying for part of your new car with the value of the one you’re getting rid of.

This makes the whole process swift and potentially painless as it’s all wrapped-up in a single transaction, plus you keep your present car until your new one is ready to collect. No in between days relying on public transport.

Inevitably there’s a downside and in this case it’s because the dealer will want to maximise their profit potential for when they re-sell your old car. Always get an online car valuation before you negotiate a price, but be aware that many dealers are given financial incentives to discount new cars. This means they are more likely to knock the price of a brand-new car down, than they are to increase the trade-in offer by the same amount.

Always do your homework

It may require a bit of legwork or time spent on the phone, but be as thorough as you can be. Why, for instance, just visit one car dealer – there might be another within an hour’s drive that might offer you a better deal.

You can always advertise the car privately while you’re waiting to agree a part-exchange deal, allowing you to keep your options open.

You will need to do your homework before selling your existing car. This could mean checking out part-exchange prices with more than one dealer as well as a car buying service.

Knowledge is power when it comes to selling a car, but the cost of a good valeting for your old car shouldn’t be underestimated either.

If it’s got some small, relatively inexpensive jobs that need fixing, get those done as well. £75 getting an alloy wheel refurbished could be the difference between a sale and someone trying to barter you down by twice that amount.

Ensure all of the car’s paperwork and bills are easily to hand, ideally in a folder, should a prospective buyer want to check it all over, but remember to keep hold of it – as well as the car – until it’s been paid for.

Whichever option you choose has to feel right for you at the time. Selling a car to get the cash isn’t better or worse than trading it in – they’re simply different. The important thing, whether you’re buying or selling, is to walk away if it doesn’t feel right – trust your instincts.