Consignment Sale

How Consignment Works

One of the best ways to get the most money for your used car is to put it on Consignment for sale at a dealership. The vehicle must be in good working condition, and in most cases, the vehicle must be brought in or driven to a participating dealerships. The owner then specifies the asking price for the vehicle, usually according to the "Kelly Blue Book". The dealer will then evaluate the vehicle as it must pass all required point tests. If all is fine, the signer of the consignment agreement (seller) pays nominal fee (usually 6%-10%) in an attempt to have the dealer sell the vehicle for a certain percentage more than that of the original asking price. As soon as the vehicle is sold, the signer is immediately notified and issued a check for the exact amount of his/her original asking price. He/She must then come into the dealership to pick up the check and sign the final papers.

Consignment sales are a nice alternative to trading a vehicle. With a consignment sale, the dealership retains control of the sale of your vehicle, allowing it to be advertised, shown and eventually sold in a reasonable amount of time (usually 60 days) while providing the seller with the opportunity to gain a considerable amount of profit.

If you want to drive a car while selling it through consignment than you have to deposit $50.00 for show ups. Which means when you agree to bring your car in you must actually bring your car to show it to potential buyer. If you don't, than you lose a deposit.

Trading In Your Car

Trading in your old car is the easiest way to cope. In fact, because even dealers of used cars generally want your trade-in, they make the procedure as easy as possible. Trading in a car is usually a same-day transaction with minimal fuss and bother. The dealer assesses the condition of your car, its age, and other factors and determines its trade-in value. You can bargain over the trade-in value if you like, or simply accept the dealer's value. In the end, the amount the dealer gives you for your trade-in is deducted from the amount you pay for your new vehicle.

Trade-in value is generally lower than the amount you could sell the car for yourself in a private-party sale, but by trading in you avoid significant pitfalls. You save time, effort and potential post-sale headaches. As Donna Reichle, spokeswoman for the National Automobile Dealers Association, explained, "If you sell your car yourself you are basically making yourself available to the buyer. When you trade in your car to a dealer you absolve yourself of liability."

Trading in is about convenience-there are no advertisements to place, no test drives to arrange, and no legal battles to fight if your recently-sold car breaks down. For those people without the time or inclination to sell a car on their own, trading in makes sense. Once a car is in the dealer's hands, it's the dealer's responsibility to prepare it and handle the resale.

Of course, for those efforts and responsibilities a dealer is justified in setting a suggested retail value on the vehicle that is higher than the trade-in value. The higher price covers refurbishing, marketing costs, "and, frankly, dealer profit," said Reichle. "The next person buying the car gets the advantages the dealer has put into it," she added.

Trading-in may also offer a tax advantage if you are buying a vehicle at the same time. In most states, according to dealers and regional authorities contacted by MSN Autos, when your car is taken in trade you only pay sales tax on the difference in cost between its trade-in value and the price of the new car. For example, if a dealer gives you $10,000 on your trade-in and the purchase price of the car you are buying is $25,000, you'll only be required to pay sales tax on the $15,000 difference between the two amounts. In states with a high sales tax, this benefit can help narrow the difference between trade-in value and private party price.

Selling Your Car Yourself

Selling a car on your own is good insurance that you'll obtain top dollar, and it may be your only option if you are buying your next vehicle through a private-party sale. But be aware of the work involved. Prepping your vehicle for sale will take time, and depending on its condition may also cost you some money. Honestly assess the car's condition, and then decide how much you want to spend on minor repairs, always remembering the liability involved with a private-party sale. Be sure to fix things well enough to avoid running into possible legal troubles farther down the road.