The Internet is a wonderful tool for helping find a new vehicle; you can compare features and prices, even negotiate your purchase price. But the plot thickens when you have a car or truck to trade in. The retail asking prices you’ll find when looking to gauge your vehicle’s value can be misleading. Not only do they represent what the seller wants for their ride—as opposed to true market value—they also don’t necessary take into account such variables as color and options, and most especially condition.

Complicating matters is that there is more than one bluebook. NADA and Kelley are the two big ones, yet the same vehicle routinely varies thousands of dollars between the two. Make sure you’re looking at the one used in your region of the country.

There is no way to really know most vehicle’s condition without seeing it in the metal and driving it. Even experts in the wholesale side of the business miss things. And services like CARFAX are no substitute. We’ll cover these topics more in the future. For now, let’s discuss if you should trade it in or sell it yourself.

The biggest determinate for most folk on whether to trade is tax law in your particular state. For example, in Colorado, buyers pay sales tax on the net difference between what they are buying and what they’re turning in. As a simple comparison, let’s imagine your trade is worth $17,500 if sold retail through the paper, and the most a dealer would offer on trade was $15,500. Yet, at a 7.5% sales tax rate (pretty typical nationwide), the sales tax savings would be $1162.50: almost half the difference. But in California, the sales tax savings doesn’t apply. So, first thing is to find out your state’s tax law regarding trade in vehicles.

If you can reap the tax savings (which means your car needs to be worth at least $15-20k), it becomes an easy decision to trade. No muss, no fuss. No one coming by the house for test drives at inopportune times, no fraudulent checks (estimates are that almost 30% of cashiers checks are fraudulent these days), and no exposure to unseemly characters.

Before we finish this part of the discussion, here is a way to sell your vehicle for the higher retail amount, and get the tax savings: find a buyer first, then work with a dealer that will allow you to run the paperwork through them as if your vehicle were a trade. They then turn around and sell it to your buyer at the price you’ve negotiated already. Be prepared for them to charge you a ‘pass through’ or document fee of $100-500, but the net can still be to your advantage. And some states even allow you carry a sales tax ‘credit’ on a vehicle you ‘trade’ throughout the calendar year—at that dealer only.

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