HALIFAX — Jonathan Tyson sold two cars in two years. The first, a Volkswagen Golf, he advertised through online classifieds and sold privately.

“We had a number of people try to lowball us,” he said, noting that one tire kicker even came for a test drive before offering substantially below the advertised price. “I had researched the value and had a good idea what it was worth so I just said, 'No thanks.'"

The Halifax resident eventually received a fair offer for about $500 below his asking price. 

The second car he sold was a Mazda 3, and this time Tyson traded it into a dealership to put toward a new plug-in electric hybrid. 

“The convenience of just handing the dealer the keys and the benefit of having the sales tax reduced on the new vehicle made the trade-in worth it,” he said. “It was a much smoother process.”

When it comes to selling a vehicle, experts say the choice between a private sale or trade-in depends on whether the seller is looking for maximum cash value or convenience.

There are multiple factors to consider, including the age, condition and value of the vehicle being sold, whether the seller intends to buy a new vehicle, how firm they are on price and how quickly they want a sale. 

“It really comes down to the person,” said Ryan Peterson, automotive services manager with CAA South Central Ontario. “There are different stressors when it comes to trading in a vehicle versus selling it privately.”

Still, experts say there are general guidelines people should know before selling a vehicle — and it all starts with research. 

While online car valuation calculators can offer sellers valuable insight, Peterson said getting an independent opinion will help get top dollar for a vehicle. 

“Before you try selling the car, take it to a trusted repair facility to find out what, if anything, is wrong and the cost of fixing it,” he said. “It will give you a better idea of a fair price.”

Whether a seller should actually pay to have repair or maintenance work done depends on who's buying, experts say. 

“If the vehicle needs a lot of cosmetic work, it will spook private buyers,” said George Iny, director of the Automobile Protection Association. “Many won't touch it at all, and others will want to pay a lot less. And if you're selling privately and there's a light on the dash, forget it.”

But if someone is trading in a vehicle to a dealer, Iny said to skip repair work. 

“Dealers can do the work for half the price you would pay,” he said. “You would never recover what you’d pay for those repairs.”

Experts say whether a vehicle is being sold privately or to a dealer, it helps to have all the vehicle service records ready and to have the vehicle detailed.  

“If you can show some kind of service history, it will help both with a private buyer and a dealer,” Iny said. 

Meanwhile, when it comes to getting the best value for your car, experts agree that you typically geta higher price selling it privately.

“But the work is all on you,” said James Hancock, director of business development for Canadian Black Book, an automotive data analytics company. 

“You have to get your car ready for sale, advertise it, market it, recondition your car and then set up all the test drives, and there's some liability with that.”

While sellers may get less money from a dealer, it’s more convenient, he said. 

“The onus is really on the buying dealership to recondition and certify the car, market it and take on the liability,” Hancock said. 

Trading in a vehicle is typically faster than a private sale. 

“You walk into the dealership, you drop off the keys, they do all paperwork and you walk out a few minutes later with a shiny new vehicle,” CAA's Peterson said. 

There’s also a tax benefit associated with a trade-in if the seller plans on buying another car. 

The dealer provides the seller with an allowance on the price of a new vehicle based on the value of the trade-in, Hancock said. 

“It reduces the pre-tax value of the new car, so you only pay the sales tax on the difference,” he said. 

In a province like Alberta, which only charges the five per cent federal Goods and Services Tax (GST), it may not make much of a difference. 

But in the Atlantic provinces — where sales tax is the highest in the country at 15 per cent — trading in a vehicle worth $10,000 to buy a vehicle worth $40,000 would lower the purchase price to $30,000 and reduce the taxes owed to $4,500 from $6,000.

The bottom line for sellers is to consider what makes sense for them.

“The private sale market is still very much alive,” Iny said. “But we find the general trend is toward trading your vehicle into dealerships.”

Meanwhile, experts say now is a good time to sell, whether privately or to a dealer. 

“Prices are at historical highs right now so you will have that benefit,” Hancock said. “You will receive the maximum you're going to get.”

But the flip side is that manufacturers are offering fewer incentives on new vehicles due to a shortage of semiconductors that’s causing lengthy wait times for new vehicles, he said

“So you will be paying a little bit more for a Rav 4 today than you would have in 2019.”

This report by The Canadian Press was first published July 22, 2021.

Brett Bundale, The Canadian Press