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Getting ready for a road trip and realizing you don't have enough space in your car for everything and everyone can put a damper on things.

If you've outgrown your car, it may be time for a new set of wheels. Depending on your situation, you may decide to do a trade-in or private sale. Each of these options has its own pros and cons, and the difference in value between them can be substantial. Here's how to decide which is right for you.

Trade-Ins Offer Convenience

Before trading in a car, look up the value of your vehicle in Kelley Blue Book or another auto reference so that you have an estimate of what it's worth. Bear in mind that dealers' offers may be less than this estimate so your best bet is to ask a few dealerships for trade-in quotes and then compare.

The main benefit of a trade-in is that it's quick and easy. You simply bring the car and documentation (including the title and loan payoff information) to a dealership and sign the forms necessary for the trade. There's no need to advertise the car or do any of the work involved with finding a buyer, showing the vehicle, and arranging a sale. In exchange for the car, you'll receive credit toward your next vehicle purchase right away rather than waiting days or weeks for someone to respond to an ad.

The downside of trading in a car is that the credit you receive may be considerably less than the sale amount you'd get if you sold the car privately, especially if the dealer is affiliated with a competing manufacturer. So while a trade-in does reduce the down payment on your next car, you may get better value by selling the car to a private buyer and then using the cash toward your down payment.

Another thing to keep in mind is that a trade-in results in a credit, which can only be used at the dealership. Selling a car privately for cash gives you far more flexibility. You can use the money from a sale to shop at any dealership. Or, you can hold off on buying a car and use the money for something else entirely. A trade-in is more restrictive and limits your options.

Selling Privately Often Gives Better Value

Selling a car yourself can definitely be beneficial, but there's also a decent amount of work that has to be done to make it worth it. First, research how much your car is worth and set a price. As the seller, you have to advertise, which may require additional spending. The seller also has to field calls from potential buyers and answer their questions. When a buyer is interested, the seller meets them and accompanies them on a test drive. The seller and buyer negotiate a final price, the buyer provides payment, and the seller gives the buyer the title, bill of sale, and possibly a release of liability form — depending on the state.

This process takes time, so you could be waiting a while before you close a sale. And it's necessary to schedule test drives and be available to show the car, which may be an inconvenience. Plus, if the asking price is higher than market value, the seller may not get any offers and will have to revise the price and advertise again. And whether a seller maximizes value from the sale depends on his or her negotiating skills and ability to reach an agreement with a buyer.

However, private sales have some big advantages. You're paid in cash, so how you spend it is up to you. You can make a down payment at any car dealership, or buy something completely different, like an RV. Remember, it's often possible to get a better value for your car through a private sale. A private sale can give you more money to put toward your next car or to save for another purchase down the road.

Whether to choose a trade-in or private sale ultimately depends on whether you want to maximize the amount of money you receive or save time and effort. Trading in a car is easy and convenient, but that comes at a cost: you get less value for your car. On the other hand, selling your car privately requires some extra work, but it can pay off if you negotiate a better sale price; it also gives you the flexibility of being paid in cash.

This information and recommendations contained herein is compiled from sources deemed reliable, but is not represented to be accurate or complete. In providing this information, neither KeyBank nor its affiliates are acting as your agent or is offering any tax, accounting, or legal advice.

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