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How To Decide: Is Now The Best Time To Sell Your Car?

Hanna Kielar5-Minute Read
UPDATED: December 13, 2022


Uncertain times often create big questions about money, especially when making big financial decisions – like “Should I sell my car?” Here’s the good news: You now stand to make more money than ever off your car. Between March 2020 and November 2021, used car prices went up 147%, according to the U.S. Bureau of Labor Statistics.

That said, if selling your old car puts you in the competitive market for a new car, you’ll risk winding up at the same end of the negotiating table as other potential buyers.

This guide is meant to help you determine if the benefits of selling your car outweigh the risks in the current market.

Understanding The Context Of The COVID-19 Pandemic

While we don’t have the same hindsight as historians, we can point to a few reasons the current used car market has shifted so dramatically during the pandemic.

For one, a lot of people decided that driving their own vehicle would help reduce their risk of catching COVID, which increased demand for cars across the board.

Then, COVID disrupted the global microchip supply chain and created a shortage. Since microchips are essential in car manufacturing, the shortage led automakers to ration their vehicle production in favor of makes and models that made the most profit (read: the more expensive cars). As the production of affordable vehicles came to a halt, more and more car buyers looked to the used market.

While the microchip industry slowly recovers, automakers and dealerships are still selling new cars – but not as many and at much higher prices with fewer incentives.

And it looks like this trend is here to stay. In May 2021, the largest automaker in the United States, General Motors, shared its plans to leverage consumer demand by maintaining low production at higher profit margins.

But what do these changes in the car market mean if you are deciding whether or not to sell? We have some ideas that may help you.

How Much Can I Sell My Car For?

It’s worth doing the research to find out how much your car is worth, regardless of your financial position. The hot market, the condition of your vehicle and its Kelley Blue Book value are all important in helping you decide how much you should sell your car for.

You can also browse the web to check prices of used cars for sale in your area. Be sure to filter your search for the model year, mileage range and vehicle condition that’s as close to your car as possible.

Not sure about the best place to sell your car yet? Read on.

Should You Trade In Your Car Or Sell It For Cash?

There’s no one-size-fits-all answer when it comes to trade-ins vs. private sales. But you can compare the pros and cons and decide for yourself if it's better to trade in or sell your car privately.

Trade-In: Pros And Cons

The number one benefit of trading in your car to a dealership is the convenience, especially when compared to selling privately. You won’t have to worry about marketing your car for sale or filling out the DMV paperwork to transfer ownership. If you’re still making payments on your car, trading in a car with a loan is the easiest and fastest way to bypass lengthy communication with your lender.

That said, the exchange for convenience could be a lower offer than you would get selling privately. That’s because dealerships need to buy the car from you for less than they think they can sell it for on the lot to ensure a profit. Dealerships also need to account for any cleaning, maintenance and advertising costs. Still, used car sellers have more negotiating power than ever before, and you may get dealers to drop some fees or up their offer.

Private Sale: Pros And Cons

On the opposite side of the coin, the biggest pro to selling your car privately is that it is often the most profitable way to go, though the biggest con is that it will cost you more time and energy. After you craft an advertisement for your car, you need to be prepared to field questions from prospective buyers, schedule test drives and decide on a safe meeting spot.

It is also important to pay attention to safety in private selling situations. You will often be dealing with strangers and want to avoid any scamming situations. Meet in a public space that is well lit, and bring a buddy if you can or at least let a few trusted people know where you are. Also confirm the payment has cleared before you turn over the keys. Make sure you have done your homework to find out what your car is worth and what your car.

Whether you sell your car to a dealer for a trade or sell it yourself, you could get higher offers today – maybe many thousands of dollars more – than you could have just a couple of years ago.

Reasons Not To Sell Your Car

One of your reasons for selling might be to relieve financial stress. If that’s the case, selling your car will offer an infusion of cash, no doubt. But there may be reasons to hold on to your car a little longer while you explore ways to ease those money worries. Let’s take a quick look at a couple.

Your Auto Loan Is Upside Down

If you owe more on your vehicle than it’s worth, your loan is considered upside down, also referred to as having “negative equity” in your car. If this is your situation, it’s a great idea to take another look at the terms of your auto loan. First, see how the interest rate on your existing loan compares to loan rates today. It’s possible that rates are lower now than when you first took out the loan. Then, check your credit score to see if it has changed since then.

If interest rates are lower and your credit score is higher, consider refinancing your car loan for a lower interest rate or longer loan term to reduce your car payment. Be careful to compare the total interest paid over time to avoid the trap of a lower monthly payment, but higher total loan amount.

You Can’t Afford The Gas

The pandemic’s effect on car owners extends to the rising gas prices we’re experiencing all around the country. If you want your next vehicle to be more fuel efficient, you’re not alone. A Consumer Reports survey found that, of over a dozen different attributes, fuel economy came in as the attribute owners wanted to improve in their current vehicle. Only 6% of respondents said that fuel economy was not very important or not at all important in their next vehicle purchase.

If you are one of the 6%, be sure to compare the cost of the best gas mileage cars available on the used car market with the profit you expect to make off your old car. Remember to compare the additional costs of car insurance and maintenance. You’ll also want to figure out how much you will save in gas compared to the cost of owning the more efficient car overall. Hopefully, that will help you decide if selling your car and buying one that saves on gas is the right investment.

The Bottom Line: You Should Sell If You’re Trading Up

With automakers leaning toward producing less combined with the continued demand for used vehicles, it looks like your car will likely hold its value at least through 2022. Regardless, you should have a firm grasp on how much your car is worth before deciding if you should sell it.

Hanna Kielar

Hanna Kielar is a Section Editor for Rocket Auto℠, RocketHQ℠, and Rocket Loans® with a focus on personal finance, automotive, and personal loans. She has a B.A. in Professional Writing from Michigan State University.