Trade in or sell privately? What Texas buyers should know
If you have a car to get rid of, you can trade it in at the dealer you're buying from, or sell it yourself. A private sale usually brings a higher price; a trade-in is faster and, in Texas, lowers the tax on the car you're buying. Here's how to compare them fairly.
The Texas tax difference
When you trade a car in at a dealer as part of buying another, Texas generally charges the 6.25% motor vehicle sales tax only on the difference between the new car's price and your trade-in's value. Sell your old car privately instead and you pay tax on the full price of the car you buy. The Texas Comptroller has the details.
A worked example: you're buying a $20,000 car and your old car is worth $8,000.
- Trade it in: tax on $12,000 = $750.
- Sell it privately: tax on $20,000 = $1,250.
So the trade-in saves $500 in tax here. Selling privately only comes out ahead if you get more than about $500 above the trade-in offer, and it's worth it to you to handle the sale yourself.
Get a fair trade-in number
- Get a quick estimate first. The trade-in estimate on the CARZyro homepage gives you a starting range.
- Ask more than one dealer, and ask for the trade-in value and the price of the car you're buying as two separate numbers. A generous trade-in can be offset by a higher price.
- Clean the car, and bring the title (or your loan details), both keys and any service records.
If you sell privately
- Meet safely: in daylight, in a public place. Many police stations offer a safe exchange spot.
- Get paid safely: cash counted at your bank, or a cashier's check you verify by calling the issuing bank yourself. Don't sign over the title until the money is in your account.
- Do the paperwork: sign the title over, and file a Vehicle Transfer Notification with TxDMV right after the sale so later tickets and tolls aren't yours.
- List it where local buyers look. You can sell your car on CARZyro: buyers contact you through the site, so your phone number and email stay private.
This guide is general information to help you shop, not legal or financial advice. Rules and fees change, so check the official source linked above before you rely on them.