Not all relationships are built to last. You’ve had your car through good times and bad, but your needs have changed. You need more space, better reliability and the latest technology. It’s time to say goodbye to your current ride, and make room for a new(er) one.
There are a number of options for getting rid of your car, but let’s focus on these three:
- Selling privately
- Trading it in
- Selling it on consignmentSelling privately may get you the most money for your vehicle but there are challenges to overcome: posting advertisements (online marketplaces like AutoTRADER, Kijiji and Craigslist provide free ad space to private sellers), responding to calls, texts and emails, waiting for buyers who make an appointment but don’t show, meeting strangers to demonstrate the vehicle (it’s a good idea to have someone with you when meeting potential purchasers), obtaining a Used Vehicle Information Package (Ontario law requires private sellers to provide one to the buyer), arranging secure payment (will it be cash, bank draft, EMT?), ensuring the buyer transfers the ownership from your name; the process isn’t for the faint of heart.Trading a vehicle in means you’ll likely get less for it as the dealer will only pay the wholesale value; but there are also some upsides. It’s easy, fast, secure and there are tax advantages as you’ll only have to pay HST on the cash difference. In other words, if you’re buying a $25,000 vehicle and the dealer gives you $10,000 for your trade-in, you only pay HST on the $15,000 difference — a savings of $1,300. It’s worth noting that the dealer will ask you to sign a trade-in disclosure document outlining important information about the history and condition of your trade (e.g. previous accidents). They are required to do this by law as they must make disclosures to anyone they then sell the vehicle to.
Consignment may not be that common, but some dealers do offer the service. They will put your vehicle on their lot and sell it — for a fee; most often a percentage of the sale. The dealer is required to have a written agreement with the consignor outlining the expected selling price, the minimum selling price and the fee they will charge. Dealers are also required to hold all funds received on a consignment sale in a trust account.
To help with your decision, make sure you do your research. Consult the Canadian Black Book. This free online service provides wholesale value estimates as well as an equity calculator, which includes information on carrying the balance of a loan into a new deal. Of course, the website of Ontario’s Vehicle Sales Regulator, OMVIC, offers plenty of resources.
Once you’ve made your choice on how to part with your ride, ensure you have all paperwork in order and take a final look before you move on to your next set of wheels.
To learn more about your car-buying rights, visit OMVIC.ca.