Can I Sell My Car Back to the Dealership? An In-Depth Guide

Selling a car can be a tedious process. Between advertising, meeting potential buyers, negotiating prices and finalizing paperwork, it requires significant time and effort on the seller’s part. This leads many people to consider an easier option: taking their car back to the dealership they originally bought it from and trading it in or selling it back. But is this actually a good idea, and is it even possible? Here’s an in-depth look at whether and how you can sell your car back to the dealership.

Can You Legally Sell Your Car Back to the Dealership?

The short answer is yes, in most cases you can sell your car back to the dealership you purchased it from. However, there are some important caveats to keep in mind:

• If you still owe money on a loan for the car you will likely need to pay off the remaining balance before the dealership can take possession of it. They cannot legally own a car that still has an outstanding lien.

• Dealerships are not legally obligated to buy back cars Just because you want to sell it back does not mean they are required to purchase it from you This is up to their discretion based on factors like demand, current inventory and your car’s condition.

• Certain state lemon laws may require a dealer to buy back a seriously defective new car. But these laws vary widely so you need to research the regulations in your state.

As long as you fully own the car and the dealer agrees to the transaction, selling back to them is completely legal But it’s not an absolute right, so you need to negotiate the deal just like any other private party sale

What Are the Potential Pros of Selling Your Car Back?

Trading in or selling back to the dealership where you originally bought your car can offer some nice conveniences and benefits:

• It’s quick and easy – You can usually complete the sale in one short visit without the hassles of advertising and showing the car to numerous potential buyers.

• Less paperwork – The dealer already has all your information on file so there is minimal documentation required. All you need to sign is a basic sales contract.

• Incentives for a new purchase – Many dealers will offer better trade-in values if you are planning to buy another car from them. Some even guarantee trade-in values for future purchases.

• No need to pay off your existing auto loan first – If you roll the trade-in value to a new purchase, the dealer will pay off your old loan balance directly so you don’t have to come up with the cash.

• Tax savings – In most states, sales tax on a new vehicle purchase is based on the net price after the trade-in value is deducted. Trading in can save you hundreds in taxes.

What Are the Potential Cons of Selling Back to the Dealer?

Despite the conveniences, there are also some significant downsides to consider with selling or trading a car back to the dealership:

• You will almost always get a lower price – Dealers need to make a profit reselling your car, so they will offer well below private party market value. Expect $1,000 to $3,000 less on average.

• Fees and charges can lower your net trade-in value – Many dealers tack on reconditioning fees, advertising fees, documentation fees and other charges against the trade-in value. This further reduces the net amount they pay you.

• You lose negotiation leverage – When trading in one car to buy another, you lose the ability to negotiate the new car’s price separately from the trade-in value. This weakens your overall deal.

• Pressure to purchase another car – Even if you don’t want to buy right away, some dealers will use high-pressure tactics to get you into another sale through the lure of a trade-in.

• Limited window to change your mind – Unlike a private party sale, it is very difficult to undo a trade-in if you later regret the deal or change your mind. The dealer owns your old car immediately.

Steps for Selling Your Car Back to the Dealership

If you weigh the pros and cons and decide trading in or selling back to the dealer still makes sense for you, here are the typical steps involved:

1. Contact the dealership – Call ahead to find out if they are interested in buying your specific year, make and model. Confirm they are actively purchasing used vehicles versus just taking trade-ins.

2. Get an appraisal – Take your car to the dealer and have them assess its condition and confirm it has a clean title. They will provide a written offer good for a short period, usually a few days.

3. Consider the offer – Compare the dealer quote to private party and instant cash offers like those from CarBuyer to determine if it’s your best option. Negotiate if it seems too low.

4. Complete paperwork – Once you accept the offer, complete a basic sales contract and odometer statement. They pay you directly or apply the value toward a new car purchase.

5. Turn over keys and ownership – The dealer will have you sign the title over to them. Remove your license plates and any personal belongings before handing over the keys. The sale is done.

Are There Alternatives to Trading In?

Selling or trading your car back to the dealership is just one option. Others to consider include:

• Selling privately for maximum return. This involves more work but nets on average $1,000-$3,000 more.

• Using an instant online cash offer service like CarBuyer. These provide guaranteed quotes and convenient at-home pickup for busy sellers.

• Donating to a charitable organization for a tax write-off. Make sure to get proper documentation for the deduction.

• Junking or scrapping the car if it’s very old or no longer running. Scrap yards pay cash for junk cars with no titles required.

The Bottom Line

Trading in or selling back your used car to the dealership where you bought it can be fast and convenient in many cases. But it likely will give you the lowest return compared to other options. Weigh the pros and cons carefully for your situation before deciding. And explore all your alternatives, including private sales and instant cash offers, to maximize your car’s value.